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4 

HON.  J.  H.  WALKER, 

OF  MASSACHUSETTS. 


TEN  YEARS  MEMBER  OF, 

EIGHT  YEARS   FIRST  REPUBLICAN  NAMED  ON, 

AND  FOUR  YEARS 


CHAIRMAN  OF  COMMITTEE 


ON 


BANKING  AND  CURRENCY, 


NATIONAL    HOUSE    OF    REPRESENTATIVES. 


1898-99. 


UNIVERSITY  OF  CALIFORNIA 
AT    LOS  ANGELES 


HON.  J.   H.   WALKER 

OF   MASSACHUSETTS. 


TEN  YEARS  .MEMBER  OF, 

EIGHT  YEARS    FIRST  REPUBLICAN  NAMED  ON, 

AND  FOUR  YEARS 


CHAIRMAN  OF  COMMITTEE 


ON 


BANKING  AND  CURRENCY, 


NATIONAL    HOUSE    OF    REPRESENTATIVES. 


1898-99. 


•   •      *  •     .  •  i 


4 


.    .     .       '.    -    •  . 


\  •  •«  :\ 


•  .      • 


4 
5  INDEX. 


^ 


Advisors,  Hoard  of in=, 

Agricultural  States 140 

Aggravated  by  Remedies  Proposed 17 

Agricultural  States,  Loss  in 11 

Aldrich,  Senator 17 

Alexander,  Hamilton 143 

Ambitions  in  Committee 8 

Petty 51 

Asset  Currency,  the  People's  Money    [65 

Asset  Currency,  Safe 143-159 

Banks,  Agents  of  Civilization [73 

Banks,  not  Bondholders 104 

Bank  of  England  Currency  Condemned 132 

System 23-13; 

System  bad  for  us 180 

Currency  makes  panics  [85 

Prance    [32 

Germany,    etc    45 

Germany 23-24 

Bank  Capital  and  Cash : vs 

Money  tone  lowers  interest  rates 1  17 

"     5%  Redemption  Fund 164 

' '     Complete  in  itself 36 

' '     Examinations 1 64 

Money  vs4.  Government  Money r4(S 

' '     Notes  made  Legal  Tender [6 

' "     a  Preserver  of  Capital 41 

Banks,  Wildcat 46 

Country  reduce  Costs  to  Farmers 174 

' '       Commercial 151 

in  the  Country  are  Safe ill 

in  State  Sound 46 

only  can  legitimately  redeem  in  specie 7 

make  normal  coin  redemption 1 1 

and  gold  redemption 39 

preserve  and  increase  wealth 41 

Saving 151 

safe  during  transitiou [39 

united  but  independent 50 

union  of  necessary 25-  1  v  1 

are  now  united  in  the  U.  S.  Treasury 13 2 

united 36 

' '       with  branches 25 

' '       in  war 1 55 

Banking  Bills  proposed r 

Bill  needed  from  1866  to  1873 152 

Complete  in  itself 36 

bunds  Deficient  in  Agricultural  Sections 140 

Funds  in  Cities 14' 

in  Agricultural  Sections 133 

Law  National  Depopulates  the  Country  districts 150 

"         office  of 

Principles  that  are  sound 27 

Committee,  Members,  Object  sought s 

System  built  up  from  the  bottom J5 

and   Financial  Journal,   London,  on  Crisis  of   1890 2; 

a  Natural  Development 

a  Natural  Right 1 45 

Balance  of  trade  and  Gold , $9 

of  trade 54 


215 


ii  INPI.X. 

Baltimore  Plan 4 

ard  Bauki:  in  22 

Baring  Brothers'  Panic  23-24 

Brothers'  Bond 24 

Bill  Bridge  in  Sections       •:>n 

"     How  Agreed  upon 

1 141 1,  Wrongfully  Referred -" 

Hili   Fowler. 8 

withdrawn    9 

Bills    Imperical — offend  sound  hanking  principles  and  sound  econom- 
ics   22-129-175 

Board  of  Advise-  -  l65 

Bond  Issue  of   1898 2° 

Bon  Is,  Price  of  and  Currency  2'8 

U.  S.,  Use  of 44 

Branch  Banks '7- 

vas  Back  and  Terrapin  Facts    '7 

Champagne  Arguments '7 

Capital  and  Banking '51 

Chain  Endless 49 

Challenge  Criticism I7~31 

Change  in  Opinion   45 

Chicago  Banking  and    Financial  Journal 23 

City  Banks  favored  in  Bonds  Required 170-172 

Favored  lftl 

vs.  Country  Banks '5° 

Cities  Built  up  by  the  Country    15° 

City  Bj.nks  Issue  Little  Currency '41 

favored 44 

cannot  issue  Currency  49~5° 

City  and  Country  Banks 45 

Clearing  Houses ID2 

in  Worcester,  Massachusetts 239 

By-Laws,  of 284 

and  Treasurv  Conditions   167 

New  York  .  .' 131 

International    53 

Comptroller  Kckles'  Report 6 

of  Currency,  Office  of  Abolished   168 

Coinage,  weights  and  measure  Committee,  pledged   22 

Committee,  Members  of,  Treated  Unjustly 15 

Pledged ' 14-16-22 

Contraction  of  Currency  165 

Connecticut  Banking  Law 149 

Conant,  Hon.    Charles  A 8 

Congressional  Wisdom,  Prejudice  and  Ignorance 51 

Country  Banks  reduce  Costs 174 

Discriminated  against 170 

safe 144 

oppressed  44~49 

Commerce  and  Gold    38 

Currency  issued  in  ratio  to  Capital  in  Germany,  France,  etc 45 

issuing  a  natural  right 145 

not  guaranteed 49 

made  legal  tender 48 

must  be  issued   by  Banks 7 

Expansion 165 

ami  Deposits  identical 44 

Tries  Banks 36 

title  to  products 52 

unsecured     47 

Redemption    168 

niel  come  to  Judgment   13 

eal  of  Walker    3 

I  defeating  Congressmen  by  Hauna 11-12 

ad  Bank  Currency  Identical 44 

Disaster  and  Panic 22 

Division  of  Treasury  Funds 47 


IM>  Ill 

Discussion,  what  the  people  say  in 177 

Doubt : 1" 

Dynamite  political  in  Financial  Questions 29 

Economic  Principles  of,  Violated (75 

Economics  Unsound '•  •  ■  ■ 

Eckles,  Son.  James  II., 36 

"  Reports 5 

England,  Amount  of  Money  in 37 

Endless  Chain 49-'59 

Evils  are  Fundamental 47 

Exporting  Gold 52 

Pairchilds,  Hon.  ('.  S.,  Ex.  Sec.  of  Treasury 36 

A.sst  1  Currency  the  Best 210 

Bank  Currency  as  safe  as  Bond  Currency 219 

"     loses  Interest  on  Bond  Secured  Currency 217 

Banks  lose  equivalent  of  interest  on  every  dollar  of  our 

paper  money 207 

protect  Borrowers  in  Panic 220-225 

Sustain  the  Treasury 206 

Banking  Free 189 

Bill  so  drawn  as  to  regulate  price  of  bonds 225 

Bond  Secured  Currency  uses  up  Bank  Capital   213 

Bonds,  price  of,  Control  volume  of  Currency 218 

Changes  as  few  as  possible 1 89 

Chain  Endless 199 

Currency  against  Assets  as  safe  as  Bond  Currency 219 

cheap 189 

"         Discrimination  by  the  Government  against  any 

kind  injurious 190 

"         Certificates  of  Deposit  to  the  farmers 215 

"         secured  by  Bonds  increase  Interest  rates,  Hard- 
ships on  Farmers  Checks  Enterprise 215 

Present  Bank,  a  freak  currency 219 

a  first  lieu  on  a  set  safe 221 

our  System  worst  in  World 219 

Tax  on,  Bad 217 

End  less  Chain  necessary 198-199 

Farming  Sections  should  be  Considered 189 

Gold  in  Banks  is  safe  for  current  Redemption 198 

"     visible  per  capital  207-208 

"     cannot  be  gotten  by  the  people 201 

"  "     must  be  exchanged  for  silver 199-200 

"     Protected  by  depreciating  the  price  of  Bonds.  .  195-196 

"     Redemption  by  Banks  not  Required 202 

"     Redemption  required  by  Banks  uuadvisable   190 

"     requi  red 209 

Government  should   not  discriminate  for  Gold    in    the 

Law 190 

"  Inter-indebtedness  of  the  people  Evidence  of  Prosperity . 226 

Interest  Rates  Reduced  by  Eliminating  Bonds 217 

Legal  Tender  Notes  Assumed  by  Banks 203 

Parity  maintaining  by  Banks  costs  them  Nothing 

an  Expense  to  the  Treasury 205 

Redemption  should  be  in  any  Lawful  Money 190 

Silver  Certificates  to   be   under    ten    dollars   to   Protect 

Gold 

"  Silver  will  go  into  Banks  and  then  into  the  Treasury  ...202 

True  Bank  Currency 210 

Facts  from  Canvas  Back  and  Terrapin  17 

Failure,  A  Miserable 

Farmer  Oppressed 4  ' 

Fear 210 

Financial  Chronical  of  New  York 21 

Financial  1  lynamite 

Wisdom  of  Hill-Fowler  Bill 

Franco-Prussian  War  155 

France,  Volume   of   Money  in 


iv  1X1  '1   K. 

French  Banking 23-132 

Hank.  Salvation  of  Prance  in  War '5° 

Free  Banking  3» 

(.;r_r«',   Hon.   L.  J.,  Secretary  of  Treasury.  

Agricultural  Communities  need  Small   Hanks 223 

Agricultural  Loans  best  in  the  World 223 

Asset  Currency  the  best -' '" 

Gold  Redemption  by  Banks  impracticable  under  present  law    129 
Banks  in  assuming  greenbacks  <lo  not  loan  the  Government ..  204 

Can  demand  gold  of  Treasury 1 

Banking  Free ' |S 

Bond  Currency  absorbs  Hank  Capital 

Changes  should  be  few  as  possible  l°9 

Currency  and  Bank  Check  the  same    213 

••     '   Cheap ,8c> 

is  actually  redeemed  by  the  borrowers 212 

a  title  to  products 21 ' 

Depositors  would   not  object  to  first  lien  for  asset  currency.    .224 

Endless  Chain  necessary 198-199 

Farming  Sections  should  be  favored  ■  •  •  ■  ■  •  189 

Gold  must  be  controlled  by  the  Treasury  in  order  to  maintain 

Parity,  under  present  law   ■'  " 

Gold  must  be  obtainable  by  the  people 19° 

"     is  protected  by  depreciating  the  price  of  bonds 195-196 

••     redemption  immediate  is   necessary 196 

"     redemption    is    now    by  the  Treasury  either    directly  or 

indirectly i92-'93 

"     Redemption  by  Banks  not  practical   under  present  law  .  .  189 

Legal  tender  notes  assumed  by  Hanks  cost  them  nothing 204 

made  Gold  Certificates 200 

Parity  cannot  be  maintained  unless  Government  controls  gold, 

under  present  law '9" 

Products,  Currency  a  little  to 211 

Redemption  in  silver  by  Banks  is  now  lawful 194 

Treasury  always  gets  the  poorest  money  in  hard  times. . .  193-194 

cannot  demand  gold  of  Banks 191 

must  redeem   all   paper  and    silver   money  in   gold, 

directly  or  indirectly '92 

must  control  gold  to  maintain  parity 190 

must  be  ready  to  pay  gold   for  silver  or  paper 191 

True  Bank  currency  the  best 210 

Walker  Bill,  the  French  and  German  system 213 

"        "      scientific  and  safe 220 

German  Money,  Volume  of 37 

Gold,  Amount  needed 42 

"       Export  and  Import 39 

Excess  of 35 

I  low  protected 38 

How  used 5 ' 

Increased  under  Suspension I" 

Popular  Theories  of,  Erroneous 55 

Problem  of  the  Future 54 

Massed  in  one  Place  Necessary  for  Safety »  •  .  139 

Measures  Value,  How " 55 

Movement  of,  caused  by,  etc 55 

in  normal  contact  with  currency 4° 

Reserve  protected 166 

Amount  required  excessive 169 

Redemption  would  all  be  by  country  Banks 170 

for  Redemption 38 

redemption  by  Banks 39 

scarcely  moves  at  all    52 

standard,  we  have  it  now 35 

Shipments 53 

Amount  visible 37~42    '69 

( .cr  man  Banking 23-24 

.-eminent  a  Consumer  of  Wealth 41 

Money,  Amount  of 42 


[NDEX.  V 

Go\  ernraent  Money  vs.  Bank  money i  K> 

Money  increases  interest  rates .147 

Greenbacks  to  be  destroyed 132 

<iros\  en  or,  Hon.  ('has.  II.,  Roman  virtue  <>i     12    15 

as  a  prophet 17 

(  Guaranteed  Currency 162 

( rutherage,  Jules ,s 

Manila,  H.    II. 16 

ch cular '" 

Hand  not  seen  11 

Lobby 7-17 

for  Senator <  7 

Hill,  Hon.  E.  J., 9-20-18 

Imagination  of 20 

Hill-Fowler  Bill 8 

"     and  Hanua 10 

Asset-Currency [60 

vs.  Walker  Bill 157-175 

Bill  unpopular [76 

vs.  Walker  Bill,  Analysis  by  subjects 256 

Independent  Local  Banks,  are  Educators  17; 

Indianapolis  Commission 6 

"  Lobby  to  ride  the  Republican  Party 17 

Imagination  of  Mr.  Hill 20 

Impossible  Things (9 

Imports  of  Gold 52 

Industrial  System  Imperilled 40 

Injustice  to  Country  People  149 

Interest  Increase,  How ■        26  4 1 

in  Country'Districts  now  Double  normal  rates [34 

Reduced.' 138 

"       rates  lower 144 

1 11  vestigation,  patient 31 

Knox,  J.  J.,  Ex-Comptroller 6 

Legal  Tender  Notes 47 

"       Destroyed 132 

Notes  Retired 48 

Kept 161 

Tender  Notes  Assumed 171 

"      taken  under  W.  &  H.-E.  Bills 227 

Legislation  bad,  Resisted 50 

Loans  to  Capital  and   Deposits [43 

Letters  to  Committee 1  s 

Lobby,  H.  11.  Hauna 9—1 7 

Loss  to  the  People,  how  made 42 

Local  Independent  Banks,  Educators 17; 

Maine  Banking  Law 149 

Massachusetts  Banking  Law [49 

McClary,  Hon.  .T.  T 9-10 

Measuring  Value  done  by  Banks  only .' 39 

Members  old  do  not  pledge  themselves  without  Examination 15 

Minority  Report   

Monetary  Panics,  how  begun 52 

Money,  Volume  of,  in  circulation 

New  Hampshire   banking  Law i4u 

National  Bank  Act  Oppressive 5 

Natural  Right,  Banking  a 145 

Necessary,  What  is,  to  reform  [29 

( tbstacles  to  Financial  Reform 5 

( Oppresses  the  Parmer 11 

<  tpiuionsof  National  Banking  Law  changed   IS 

Parity  Maintaining  by  Banks 7-36 

ran  only  be  legitimately  maintained  by  Banks  38 

The  Duty  of   Maintaining  is  Indivisible 40  41 

Maintained     130 

Party   Pledges  not  Broken    50 

Panic  and  Disaster 23  40 

"       of   l893 24-155 


v  i  i  m  >  !■:  X  . 

Panic  would  b<  I  by  17 

er  Money,  what  is  it 1° 

Amount  of 15° 

People  are  educated  t<>  a  guaranteed  currency 161 

Peril  of  our  Industries 4° 

Petitions  of  [50  Republicans '4 

Personal  ('.lory  seeking 31 

Pet  Bank   Measure-  

Plain  people  helped '7s 

Pledged  the  Committee  before  they  were  appointed 14-16 

Pledges,  Republican J" 

Popular  Discussion,  a  -ample  of '77 

Products  and  paper  money   4" 

Pi  ejudices  uot  offended  '74 

Prologue  vs.  performance [75 

sent  Law  and  Walker  Bill '45 

Protecting  Gold 3° 

Providence  Journal 3 

Rates  of  Interest 26 

Reasons  for  Report 21-22 

Redemption  by  Banks 7 

in  Specie  by  Banks  a  Natural  Function 1 1 

of  Currency ',,s 

Referees,  A  Safe  way  of  appointing ID 

Reform  cles  to 5 

What  is  necessary  to l29 

in  Sections 5° 

Remedy  of  Evils 4° 

Remedies  that  Aggravate  the  Situation 17 

Report   1575.  Minority '  29 

Republican,  Petition  to  Speaker M 

Republicans  to  be  Saddled  with  Hanna  Lobby  and  Bill  17 

Republican  Measure,  not  a 21-22 

Reserve,  use  of 1o5 

Resumption  of  Specie  Payments  unnecessarily  delayed   for  10  years.  .  153 

Rhode  Island  Bank  Law 149 

Robbery  of  the  People 29 

Ruling  of  Chairman,  on  Banking  Bills 20 

Safety  of  Bank  asset  Currency H3 

Sergeant  at  Arms  very  useful 4 

Savings  Banks 151 

Scientific  System,  not  a   41 

Sherman,  lion.  John 5 

Silver,  Amount  of,  needed 42 

"  "    that  would  be  paid  into  Banks 49 

Demonetized 47_r33 

Dollars  redeemed  in  Gold 4^ 

"      and  Gold  Redemption  Hallucination    171 

Redemption  in  <  ".old 132 

Sound  Banking  Principles 27 

South  and  West  Robbed  of   Banking  Funds 174 

Speaker  Reed  Criticised 15 

Statesmanship 35 

State  Banks 46 

Sub-Treasury  system  original,  obsolete  and  already  gone 153 

Evils  of '. 154 

Suffolk  Bank  System 147 

Table  of  Banking  Examples,  under  each  bill  135 

"         funds,  items  of 223 

per  capital  i860- 1 897 234 

lack  of,  in  Agricultural  States 235-237 

Bank  Losses  in  City  and  Country 143 

Bonds,  Price  of  and  the  amount  of  Currency  influenced  by  ...  218 

Capital,  absorption  of,  by  bonds 145-230 

Country  and  City  Banks 135 

of  loanable  funds  in  bond  currency7 148 

mi  City  and  Country  Hanks 143 

Country  Banks,  against  the 239 


'KX.  VII 

Table  of  Currency,  Amount  of,  provided  for 163 

Existing '5s 

Profit  on  Currency  at  6%  rates  under  various  Hills 230 

in  Hill-Fowler  Bill  at  \%  to  \<<\. 231 

in  McClary  Bill,  4%  to  10^ 232 

in  Walker  Bill 230 

U.  S.  Sub-Treasury 253 

Census  Valuation  in  [861 1 238 

Taylor,  Judge    Robert   S.,  Bond  Secured  currency  tak  «tal 

away  from  Banks 

Currency    Certificates   issued  against    coin    contradicts    the 

whole  theory  of  coinage 222 

Currency,  How  issued,  a  matter  of  indifference  to  the  people. 223 
Legal  tender  notes,  the  keeping  of,  is  a  patriotic  instinct  •  •  .223 

Treasury  must  sell  bonds  for  gold  necessarily 

Taxes  on  Country  Banks 49 

Tax  on  Currency  a  hardship T7 

Ten  dollar  limit  objectionable  !s 

Things  that  cannot  be  done 47 

Toadstools  vs.  mushrooms 

Treasury  funds  divided '55 

Division  of 47 

Embarrassment  of,  Increased  Is 

in  had  Condition 155 

must  redeem  all  money 4°~48 

and  New  York  Clearing   Mouse '3T 

would  not  be  relieved 166 

How  recouped '°- 

Sub-,  list  of 253 

Transition  of  Ranks 139 

"       made  in  Safety 164 

Trade,  Balance  of 54 

Trust  Com  panies,  etc '  5 ' 

Unanimous  consent  granted 31 

Union  of  Banks 36 

Walker,  an  obstacle  to  Reform 4 

vociferates  in  Committee  when  not  in  Washington    4 

' '        and  the  Comptroller 5 

Bill  when  first  introduced 5 

protecting  the  present  law    6 

in  Indianapolis  Convention 6 

Commendation  of,  forbidden    7 

ready  to  accept  any  bill 7 

Abused 7 

Bill  never  formally  considered  in  Committee   7 

Defeat  of ' 3-11 

Hour  principles  he  stood  for  like  a  rock 8 

''.ill  vs.  Hill-Fowler  bill 

"     and  Present  Law '45 

"     not  intricate r53 

"      10,339 240 

"      [0,333    24* 

"     a  popular  measure 130 

"     and  Hill   Fowler  bill  compared  by  subjects  256 

Walker's  work  in  51SI  Congress 6 

Walker  liiil  l  o,;$.i!) 240 

"  Bank  Examination,  Section  4    241 

Bonds  taken  out  of   Banking,  Section  1    240 

Parity  penalty  tax,  Sections  2  and  3 241 

Redemption  fund  in  Specie,  Section  2    240 

l  o,:v,i.i 211 

Advisors  to  the  Comptroller  n  9 245 

Appeals  may  be  made  from  Comptroller  to  Advisors,  Sec- 
tion 9  246 

Banks  of  $25,000  allowed.  Section    1 2|i 

Certificates,  silver  and  gold,  Cancelled,  Section  8  245 

Clearing  Houses  all  Incorporated,  Section  10   247 

I  louse,  National,  Section  10 246 


vin  IND1  X. 

Walker  Hill  Clearing  House,  Nation.il  Board  ol  Directors  of,  Sec- 

:  

Clearing  Houses  \<<  Redeem  Bank  Currency,  Section  ro  • 

maybe  Fiscal  Agents,  Section  m 247 

Comptroller.  Who  are  his   legal  Advisors,  Section  9 245 

Currency.  Amount  of,  Hanks  may  take.  Serti"ii  3 

first  lien  on  Bank  Assets,  Section  15 251 

Bxpert  Advisors  to  Comptroller,  Section  .,        245 

Gold  set  asi<lc  to  Cancel   Legal  Tender  Notes,  Section  4  . .  24  ^ 

shall  be  massed  in  one  place.  Section  7 245 

•  rreenbacks  Equalized  between  Hanks.  Section  4 244 

<1  Tender  Notts  Assumed,  Section  2 

old  exchanged  for  new.  Section  4 24:, 

Emergency!  Section  11  ?]7 

t\     Penalty,  Sections  7  and    13 245 

Redemption  Duty  of,  transferred  to  Rank,  Section  6 244 

fund  to  he  kept  t,rood,  Section  6 244 

Report  to  Comptroller  made  monthly  of  daily  condition,  Section  16.  .252 

Reserve  may  He  used,  Section  13 249 

Safety  Fund  Tax,  Section  13 240 

Tax  Conditional  on  Banks  of  all  kinds,  Section    [3 230 

Transition  from  old  system  to  new,  When  Consummated,  Section  7.  .  .243 

War  Bonds  of  189S,  W'aste  in 29 

Waste  admitted  and  how  made 42-43-156 

Wasted,  Amount  of  money 35 

Wealth,  The  amount  of  in  each  realm    31 

Wisdom,  Financial '33 


TEN    YEARS 

OF 


Treasury,  Banking,  and  Currency  Reform, 


INDIANAPOLIS  COMMISSION. 


Hon.  II.  II.  HAWAII Page  7. 

Hon.  C.  II.  «KOSVIJXOR..Pagc  13. 

Hon.  I>.  .B.  BSBB.L Page  20. 

IBun.  J.  T.   W€(LEAK1       .Page  0. 


SPEECH 


OK 


HON.  JOSEPH  H.  WALKER 

OF    MASSACHUSETTS, 
]\   THE 

HOUSE  OF  REPRESENTATIVES, 


FRIDAY,  MARCH    3,  1899. 


WASHINGTON". 
1899. 


Banking  and  Currency. 


SPEECH 

OF 

II  OX.    JOSEPH    IT.   WALKER, 

On  the  financial,  banking,  and  currency  question,  the  history  and  present 
iii  ion,  etc.,  of  the  reform  of  our  Treasury— 

Mr.  WALKER  of  Massachusetts  said: 

Mr.  Speaker:  I  must  claim  the  indulgence  of  the  House  m  re 
than  ever  before,  for  I  have  a  cold  so  severe  that  I  can  hardly 
articulate,  and  am  otherwise  indisposed.  I  wish  alter  occupying 
thirty  minutes  to  be  notified,  that  I  may  yield  twenty  minutes  to 
auyone  who  desires  to  reply;  and  then  I  will  occupy  the  otherten 
minutes,  making  the  hour,  of  course  subject  to  interruptions  at 
any  time  by  privileged  reports  or  questions. 

Mr.  Speaker,  the  time  has  come  when  my  own  self-respect,  a 
decent  regard  for  the  opinions  of  my  associates  on  this  floor,  my 
duty  to  the  House,  to  the  country,  and  to  the  j>reat  cause  of  Treas- 
ury, banking,  and  currency  reform  requires  me  to  speak  in  the 
discharge  of  the  great  duties  committed  to  me  in  the  commissi  n 
I  received  from  the  House  through  the  Speaker  in  my  appoint- 
ment as  chairman  of  the  Committee  on  Banking  and  Currency 
four  years  ago.  and  ten  years  ago  as  a  member  on  that  committee. 
It  so  happens  that  gentlemen  with  pet  measures  have  been  carried 
away  by  their  enthusiasm  to  do  and  say  many  things  wholly  un- 
worthy of  them,  and  many  of  them  without  any  foundation  in  fa-  t. 
I  will  send  to  the  desk  and  ask  to  have  read  one  or  two  extracts 
from  newspapers. 

The  Clerk  read  the  extracts,  as  follows: 

[Worcester  Gazette,  January  86  1899.] 

AN  OBSTACLE   TO  CURRENCY  REFORM. 

[From  the  Providence  Journal.] 

Now  that  the  Hon.  Joseph  Walker,  though  a  sound  money  man, 
is  appearing  in  company  with  the  silverites  in  opposition  to  cur- 
rency reform  measures  before  the  House  committee,  we  may  fi  el 
a  new  satisfaction  thai  he  was  not  returned  to  the  next  Congri  — 
As  a  private  citizen  he  may  exploit  his  currency  idiosync; 
without  much  harm  to  anybody;  as  a  Member  of  the  House  he 
was  an  obstacle  to  the  consummation  of  currency  reform. 

[Now  York  Evening  Pest,  January  3, 1899.  1 

Mr.  Walker  of  Massachusetts  is  a  man  who  is  always  "on  the 
off  side.*'  A  professed  friend  of  currency  reform,  he  has.  by  his 
"crankiness,"  done  more  to  thwart  progress  than  any  silverite  in 

the  House,  and  it  will  be  a  great  gain  for  the  cause  of  sound  legis- 

3 


lation  when  ho  surrenders  bis  seat  to  the  gold-standard  Demo 
at  him  for  reelection  last  fall. 

.  York  Evening  Post,  January  :?t,  1899.] 
THE  CURRENCY-REFORM    MUDDLE— TWO   HOUSE   COMMITTEES  NOW 
.1  im;    FOR   < "NTROL  OF  THE   QUESTION — PROSPECTS  FOR 
ARE   VERY    FAINT. 

Washington,  January  28, 1S99. 
The  currency  reform  situation  in  Congress  is  assuming  a  phase 
that  is  almost  farcical.  A  meeting  of  the  committee  was  called 
to  consider  Mr.  Van  Voorhis'sbill.  The  result  was  something  like  a 
ward  caucus.  Every  tneml  er  who  has  a  bill  of  his  own  began  to 
aim  npon  its  merits,  while  Chairman  Walker  vociferated  that 
the  Walker  bill  was  the  only  currency  measure  worth  considering, 
and  that  all  the  others  were  humbugs,  brandishing  meanwhile  the 
report  he  made  last  session,  and  challenging  the  whole  world  to 
controvert  its  arguments.  When  the  hour  for  adjournment  was 
reached,  it  turned  out  that  the  whole  session  bad  been  consumed 
in  a  noisy  debate,  and  that  no  action  whatever  had  been  taken. 

MR.    WALKER   NOT  IN  WASHINGTON. 

Now.  Mr.  Speaker,  the  last  extract  was  not  from  a  regular  cor- 
respondent, but  a  visitor  in  Washington  not  specially  favorable 
to  the  Indianapolis  Commission  or  to  the  bill  prepared  by  it,  or  to 
any  hill  in  the  committee.  But  it  shows  the  atmosphere  of  this 
Capitol,  pervading  the  whole  of  it,  toward  me  and  my  attitude 
rd  this  great  reform  that  I  inaugurated  ten  years  ago,  and  for 
four  years  was  the  only  advocate  of  in  this  broad  country  until  the 
Baltimore  plan  was  formulated  on  October  11, 1894.  That  gentle- 
man simply  observed  this  attitude  toward  me  as  he  came  into  the 
atmosphere  of  the  corridors  and  in  the  House. 

Not  only  was  his  statement  untrue,  but  I  was  not  even  in  the 
city  at  the  time.  I  was  in  New  York  on  the  very  day  that  he  said 
I  was  guilty  of  the  practices  and  of  the  things  that  are  there  de- 
scribed. It  is  not  to  me  they  should  be  ascribed.  1  do  not  call 
him  to  account;  I  do  not  say  that  he  is  not  a  thoroughly  honest 
man.  I  believe  that  had  I  myself  or  my  nearest  friend  come  to 
Washington,  as  be  did,  to  investigate  the  situation,  I  should  have 
written  practically  the  same  libelous  things.  Let  me  call  the 
attention  of  this  House  to  the  membership  of  the  committee. 
They  will  remember  that  the  gentleman  from  Connecticut  [Mr. 
liu.i.)  is  a  member  of  that  committee;  that  the  gentleman  from 
Indiana  [Mr.  Johnson  |  is  also  a  member,  and  the  gentleman  from 
Tennessee  I  Mr.  Cox]  is  a  member  and  wants  his  full  rights,  and 
this  while  it  has  no  Sergeant-at-Arms,  who  renders  such  efficient 
assistance  in  debate  to  some  members  on  this  floor. 

Mr.  COX.     That  is  what  I  am  going  to  have. 

Mr.  WALKER  of  Massachusetts  (continuing).  I  would  like  to 
know  whether  order  can  be  maintained.  There  has  been  a  purpose 
to  make  it  appear  that  the  reason  why  measures  referred  to  that 
c  niinittee  have  not  succeeded  was  because  the  chairman  of  the 
imittee  was  the  unreasoning  obstacle.  Let  us  review  the  situa- 
tion. 

FJItST  STF.r.S   FOB   BANKING  AND  CURRENCY  REFORM. 

I  was  elected  to  this  House  in  1888.     I  had  written  a  little  mon- 
ograph on  '-Money,  Trade,  and  Banking."    When  I  found  I  was 
1  took  that  up  and  read  itcarefully,  until  I  came  to  the  de- 
scription of  national  banks.    Remembering  that  I  had  struggled 

3812 


longer  to  justify  the  present  organization  of  the  national  banks 
than  any  other  thing  in  the"  book,]  looked  it  over  again,  and  be- 
fore entering  this  House  in  December,  iss'.t.  I  had  made  up  my 
mind  that  the  national-bank  law  was  more  oppressive,  unjust,  and 
del(  terious  legislation  to  the  country  than  all  other  laws  on  the 
national  statute  hook  put  together. 

After  the  committees  were  appointed  in  January.  T  weni  to  the 
chairman  of  the  committee,  the  Hon.  George  W.  E.  Dorsey,  of 
Nebraska,  andstated  my  views  on  thequestion,  and  urged  that  the 
duty  rested  upon  him  to  prepare  a  bill  that  should  reform  the  in- 
equalities, that  .should  release  us  from  the  robbery  that  is  being 
perpetrated,  especially  upon  the  farming  and  sparsely  settled  dis- 
tricts of  the  country.  I  talked  with  him  several  times,  but  failed  to 
impr<  ss  him  with  the  importance  of  the  measure.  I  then  went  to 
the  Hon.  John  Sherman,  then  a  member  of  the  Finance  Committee 
of  the  Senate,  whose  acquaintance  1  had  made.  I  had  received 
fr  mi  him  and  sent  him  many  articles  and  speeches  on  the  question 
of  banking  and  currency,  and  always  visited  him  when  in  Wash- 
ington. I  tried  to  interest  him  in  this  great  reform.  He  replied 
that  the  bonds  were  being  rapidly  paid,  and  that  it  was  a  great  task 
to  legislate  so  as  to  still  continue  the  great  national  banking  sys- 
tem; that  he  saw  no  relief:  that  we  probably  must  give  up  the 
national  banking  system  and  go  back  to  State  banks. 

I  suggested  to  him  that  I  did  not  think  that  was  at  all  neces- 
sary; that  the  national  system  could  be  easily  saved  without 
bonds:  but  he  declined,  saying  that  he  was  unwilling  to  under- 
take that  great  task.  And  no  wonder.  The  obstacles  that  con- 
fronted Alexander  Hamilton  and  Albert  Gallatin  when  we  inau- 
gurated our  Government,  or  John  Locke  and  Sir  Isaac  Newton 
in  England  in  reforming  her  money,  etc..  were  not  a  tithe  of  what 
confronts  any  man  who  wdl  undertake  the  task  here.  We  have  a 
sound  currency  in  that  all  the  money  is  kept  at  i  ar.  Ours  wascon- 
fessedly  unsound  in  1792,  as  was  England's  in  Locke's  time.  Its 
fault  is  in  being  fearfully  wasteful  and  also  promotive  of  panics 
and  industrial  depressions.  Therefore  the  first  duty  that  this 
country  i  >ught  to  attend  to,  when  the  people  will  allow  us  to  do  it, 
is  to  reform  its  treasury,  banking,  and  currency  system. 

A    REMEDY  OFFERED. 

Upon  the  request  of  the  chairman  of  the  committee,  Mr.  Dorsey, 
I  commenced  this  great  ta-k  alone  and  wrote  a  bill.  I  never  yet, 
boy  or  man.  have  criticised  any  existing  condition  of  things  or 
measure  without  offering  a  remedy.  And  until  I  am  ready  to 
offer  a  remedy  1  will  not  do  so.  According  to  my  notion,  it  is  not 
honorable  for  a  man  to  find  fault  who  can  not  or  will  not  under- 
take to  suggest  a  remedy  for  the  evil  he  deprecates.  I  introduced 
it  in  the  House  on  April  1, 18110.  From  that  day  I  have  continued 
to  study,  work  upon,  change,  and  improve  that  bill  to  the  present 
time,  and  it  is  now  H.  R.  1(J:J:J:!. 

GROWTH   or  Tin:   REPORT   or  THE  COMPTROLLER   OF  THE  I  URRENCT. 

Not  only  that,  but  I  want  to  say  to  this  House  that  I  have  not 
only  worked  night  and  day  upon  this  great  reform,  but  the  day  1 
entered  Congress  that  [holding  up  a  book]  was  the  whole  of  the 
firsl  volume  of  the  Report  of  the  Comptroller  of  the  Currency 
:;  o  pages— and  that  had  been  very  largely  increased  in  size  -iii»l  in 
tin-  Pacts  presented  by  my  solicitation  of  Eacts  from  the  Comptroller 
of  the  Currency  and  of  information  on  this  great  question  long  be- 
3812 


fore  I  was  a  mi  mber  of  this  House,  which  the  Department  then 
conhl  nut  furnish.  It  was  through  my  solicitation  and  sugges- 
tion, writing  to  Hon.  John  J.  Knox,  that  the  first  reports  of  the 
daily  bank  clearings  were  published  some  twenty  or  more  years 
If  there  has  been  any  additional  information  comprised  in 
any  of  t;  ! nines  that  has  not  largely  grown  out  of  my  sug- 

Lons  I  am  not  aware  of  it. 

The  report  for  1898  contains  812  pages.  There  are  no  reports 
published  by  any  government  on  the  face  of  the  earth  that  ap- 
proach  ours  in  fullness,  accuracy,  and  importance. 

From  the  time  Mr.  Eckels  came  into  the  Department  until  he 
went  out  of  it  we  were  in  continual  conference.  He  held  one  report 
back  for  a  month  in  order  to  furnish  in  it  many  pages  of  what  I 
solicited  that  all  other  men  interested  in  the  subject  might  have 
the  advantage  of  it.  If  Mr.  Eckels  claims  every  improvement 
that  has  been  made  in  that  report  during  the  four  years  he  was  in 
office,  it  does  not  rest  with  me  to  say  that  he  is  not  fully  entitled 
to  the  credit;  and  if  he  should  say  that  I  am  entitled  to  very  much 
of  it,  it  does  not  lie  with  me  to  deny  it.  When  two  men  are  in  as 
close  association  in  the  study  of  great  problems  and  in  publishing 
the  results  as  we  were,  a  matter  of  this  kind  is  of  no  importance, 
will  not  find  me  alluded  to  anywhere  in  these  reports,  for  I 
have  always  requested  that  I  he  given  no  credit  for  anything,  to 
avoid  prejudice.  I  do  not  want  any  especial  credit,  but  I  do  want 
the  facts,  and  true,  not  bogus,  reform  in  the  interests  of  my  coun- 
try. 

WORK  IN  THE  FIFTY-FIRST  CONGRESS. 

Mr.  Speaker,  what  do  you  suppose  has  occupied  the  time  of  the 
chairman  of  the  Committee  on  Banking  and  Currency'.''  During 
the  whole  of  the  Fifty-first  Congress  I  rarely  went  to  my  bed  till 
1  or  2  o'clock  in  the  morning,  for  I  was  also  on  the  Committee  on 
Coinage, Weights,  and  Measures,  and  the  silver  question  was  then 
rampant.  I  spent  all  my  time,  as  everybody  acquainted  with  me 
knows,  either  at  my  home  or  in  the  committee  room  or  on  this 
floor,  engaged  in  the  study  and  discussion  of  these  questions, 
hardly  allowing  myself  the  slightest  amusement,  in  my  intense 
eagerness  to  work  out  some  substantial  results. 

The  duty  with  which  1  was  charged  by  the  Speaker  of  this 
House  and  by  this  House  was  first  of  all  to  protect  and  preserve 
the  laws  we  have-not  to  improve  them,  but  to  protect  and  pre- 
serve them — to  see  to  it  that  no  change  wa3  recommended  to  this 
House  by  the  committee  which  would  not  incontestably  improve 
and  not  deteriorate  the  laws  of  my  country.  That  has  been  my 
principal  occupation  for  the  whole  ten  years.  From  the  time  five 
years  ago,  when  the  public  first  became  interested  in  these  ques- 
tions, and  up  to  now  hundreds  upon  hundreds  of  communications 
have  poured  in  upon  me.  I  must  read  every  one  of  them.  I 
must  give  an  intelligent  answer.  I  must  tell  the  why  and  where- 
fore if  I  would  further  this  great  reform.  It  was  not  enough  to 
say  I  i i  a  man  that  his  scheme  was  not  practical.  He  should  know 
why  it  was  not  practical,  so  that  ho  might  be  educated  himself 
and  educate  his  neighbors  as  to  what  was  practical. 

TREATMENT   BY  THE  INDIANAPOLIS  COMMISSION. 

The  real  reason  for  the  treatment  I  have  received  since  the  ap- 
point incut  of  the  Indianapolis  commission  is  known,  I  believe,  to 
e  bul  myself.     The  convention  met  January  12,  1897. 
Mr.  Speaker,  I  want  to  read  here  the  words  that  I  took  down 


from  the  lips  of  a  man  who  was  sent  to  Washington  to  invi 
gate  and  report  upon  the  prospects  of  currency  reform,  for  tlie 
purpose  of  seeing  what  progress  had  been  made  and  what  the 
promise  was  for  the  future.  Ho  said  he  was  instructed  "  not  to 
send  any  matter  in  any  way  complimentary  of  what  Mr.  W  \i.kf.r 
of  Massachusetts  might  say  or  do  in  connection  with  it.  for  they 
did  not  approve  of  his  course  in  not  working  with  the  Indianap- 
olis commission."  I  [e  further  said  to  me  that  I  "might  have  had 
a  great  career  as  a  financial  reformer  ou  the  floor  of  the  House  of 
Representatives  if  1  had  not  been  so  strenuous  in  support  of  my 
own  bill." 

WILL   ACCEPT    ANV   SOUND  BII.T,. 

Now,  sir,  I  challenge  any  member  on  this  floor  to  find  a  solitary 
word  that  1  have  ever  said  on  the  floor  of  the  House,  or  in  the 
committee,  or  in  private  conversation,  or  in  the 'thousands  upon 
thousands  of  letters  that  I  have  written  or  interviews  given  upon 
the  subject,  that  did  not  go  to  the  point  absolutely,  that  I  would 
support  any  hill  that  anyhody  would  prepare  and  present  which 
would  correct,  in  the  first  place,  the  injustice  of  forcing  upon  the 
1  nitcd  States  Treasury  the  burden  of  maintaining  parity  of  all  of 
our  currency  and  pul  t  lie  maintenance  of  the  parity  between  our 
metallic  currency  and  paper  money  with  gold,  on  the  banks  of  the 
country  where  it  is  put  in  all  other  parts  of  the  world  and  so  re- 
lieve the  people  of  its  cost,  which  is  a  great  injustice.  This  cost 
is  some  $70,000,000,  directly  and  indirectly.  This  duty  must  be 
put  upon  the  banks,  the  only  power  known  to  man  that  can  main- 
tain parity  without  cost. 

Again,  in  the  second  place,  the  banks  must  be  permitted  to  issue 
true  bank  currency  that  will  be  available  for  all  purposes,  and  es- 
pecially  a  money  f or  use  in  the  outlying  farming  districts  of  the 
country;  and,  thirdly,  to  place  a  small  tax  upon  currency  for  the 
purpose  of  raising  a  fund  to  guarantee  by  the  Government  with- 
out loss,  every  dollar  issued  by  the  Government  to  the  banks. 

Not  only  that,  Mr.  Speaker,  but  I  have  offered,  and  will  offer 
here  and  now,  to  give  §1,000  to  any  benevolent  society  in  any  part 
of  the  country  if  any  man  will  write  a  bill  that  will  be  more  com- 
prehensive, more  thoroughly  in  accordance  with  true  economic 
principles  and  sound  banking  principles,  more  easily  understood, 
and  that  will  accomplish  the  four  things  which  I  have  suggested — 
viz,  relieve  the  Treasury  of  maintaining  parity  by  putting  that 
duty  on  banks,  unite  all  banks  to  do  it,  allow  banks  to  issue  true 
bank  currency,  and  guarantee  that  currency  by  the  <  Jovemment— 
better  than  the  bill  that  1  present.  As  I  have  said  hundreds  of 
times,  1  have  no  pride  of  opinion  in  the  matter.  I  was  willing  to 
accept  a  good  bill,  come  from  whore  it  might.  I  was  willing  to 
do  this,  not  because  I  believe  the  bill  I  have  presented  is  not  a 
good  one,  but  for  the  purpose  of  relieving  myself  of  the  abuse 
which  had  been  heaped  upon  me  for  adhering  to  fundamental 
banking  principles  and  trying  to  do  what  I  believed  to  be  right. 

In  the  four  years  that  1  nave  been  the  chairman  of  i  he  Commit- 
tee on  Banking  and  Currency  I  have  not  detained  that  committee, 
according  to  my  remembrance,  but  a  single  day,  and  that  inform- 
ally presenting  the  bill  thai  I  had  drawn,  and  in  explaining  it.  I 
have  never  had  it  formally  before  the  committee. 

mi;.  ii  \\  \  v   ami   i  in:  LOBBY. 

Mr,  Speaker.  I  want  to  say  a  word  or  two  in  reference  to  the 
Indianapolis  commission.     1  wish  to  speak  freely  upon  it,  and  also 
8812 


with  reference  to  the  chairman  of  the  committee,  Mr.  Ilanna,  as 
well  asof  the  extra  persistent  lobbyists  they  have  employed  about 
the  Capitol.  Let  me  say,  to  begin  with,  that  I  have  never  met  a 
man  who  impressed  me  more  favorably  than  Mr.  H.  H.  Hanna,  of 
Indiana.  I  do  not  think  I  have  ever  met  one  who  impressed  me 
more  forcibly  as  to  his  integrity  and  intensity  of  purpose  to  ac- 
complish a  form  than  he.  I  shall  certainly  indulge  in  no 
unnecessary  personal  criticism  of  him. 

I  want  to  say,  also,  that  the  two  gentlemen  he  employs  about 
the  Capitol  to  secure  reform  legislation  in  banking  and  cuiTency 
also  impressed  me  most  favorably.  Mr.  Jules  Guthridge,  one  of 
the  gentlemen  to  whom  I  refer,  is  one  of  the  very  best  friends  I  have 
had  from  the  time  I  came  to  Congress  to  the  present  time.  He  is  a 
man  who  would  knowingly  do  no  injustice  to  anyone.  The  other 
gentleman,  Mr.  Conant.is  of  the  same  character"  and  what  I  have 
said  of  the  other  gentleman  is  true  of  him.  He  has  the  additional 
qualification  of  knowing  a  great  deal  on  the  question  at  issue. 
But  Mr.  Hanna  has  told  me  repeatedly  that  he  knew  absolutely 
nothing  on  the  question  personally  as  an  expert. 

Mr.  Guthridge  makes  no  pretense  to  a  special  knowledge  of 
finance  or  banking.  Of  course  there  has  been  no  design  upon 
their  part  to  do  me  injustice,  but  as  I  have  stood  like  a  rock  for 
the  four  principles  fundamental  to  this  great  reform  and  in  oppo- 
sition to  every  measure  that  did  not  recognize  them,  and  have  suc- 
ceeded in  defeating  them,  it  was  inevitable  that  all  adverse  criti- 
cism should  fall  on  me. 

WHAT   HAPPENED  IX  TnK  BANKING   AXD   CURRENCY  COMMITTEE. 

Of  course  the  frailties  of  human  nature  as  well  as  its  virtues 
have  been  recognized  in  the  members  of  the  committee,  as  they 
are  in  all  bodies  of  men. 

Of  the  seventeen  members  of  the  Committee  on  Banking  and 
Curr.-ncy  five  were  of  the  minority  and  soon  excluded.  Four 
wanted  no  general  legislation.  Three  were  ready  to  vote  for  any 
general  bill.  Four  sought  places  on  the  committee,  each  to  ride 
his  hobby  to  the  front.  One  scon  tumbled  off;  one  finally  got  off. 
One  more  clambered  on  a  hobby  found  for  him,  making  three  that 
were  in  at  the  death. 

The  chairman  consistently  held  to  the  four  principles  funda- 
mental to  any  legislation  looking  to  any  improvement  in  our  finan- 
cial, banking,  and  currency  situation,  viz: 

First.  To  relieve  the  United  States  Treasury  of  any  responsi- 
bility for  current  redemption  of  any  form  of  paper  money. 

Second.  The  putting  of  the  maintenance  of  parity  on  the  banks. 

Third.  Uniting  the  banks  in  order  to  enable  them  to  maintain 
parity. 

Fourth.  Allowing  the  banks  to  issue  true  bank  currency. 

Proclaiming  his  willingness  to  support  any  bill  drawn" by  any 
man  that  made  sure  the  doing  of  these  four  things,  he  has  as 
steadily  refused  to  support  any  bill  that  would  make  confusion 
worse  confounded,  as  every  general  bill  the  committee  has  yet 
formally  considered  surely  would. 

II.  R.  10280  KKPORTED  WITHOUT  AUTHORITY. 

The  voting  began  on  the  bill  (H.  R.  lOOS'J)  that  was  finally 
y  reported  to  the  House  on  the  11th  of  May,  but  was 
never  completed.  On  June  13  it  was,  without  authority,  re- 
ported  to  the  House. 

Mr.  HILL.    Mr.  Speaker,  in  order  to  relieve  the  gentleman  from 


9 

Massachusetts  from  any  embarrassment,  I  shall  necessarily  feel 
called  upon  to  make  a  point  of  order  that  any  proceedings  of  the 
committee  are  not  to  be  revealed  in  the  I  louse.  Now,  I  have  not 
slightest  objection  to  the  <  !hair  overruling  that  point  of  order, 
because  I  want  to  violate  it  myself,  if  necessary. 

Mr.  WALEEE  of  Massachusetts.  I  hope  this  will  not  come 
out  of  my  time. 

The  SPEAKER  pro  tempore.  The  gentleman  from  Massachu- 
setts lias  the  floor. 

Mr.  WALKER  of  Massachusetts.  The  order  under  which  I  am 
speaking  gives  me  authority  to  go  into  all  the  history  of  this  re- 
form, in  the  committee  and  out. 

MR.  M'CI.EAUY    WANTED   HIS  NAME  ON   THE   IULIj. 

Mr.  Speaker,  when  H.  R.  10389  was  completed,  against  the 
earnest  protest  of  the  chairman,  who  tried  his  best  to  induce  the 
Ci  uiiniittee  to  allow  the  honorable  gentleman  from  Minnesota  |  Mr. 
M<  (  'i.kary]  to  put  his  name  on  the  bill,  the  committee,  under  the 
lead  of  the  honorable  gentleman  from  Connecticut  [Mr.  Hill] 
directed  the  chairman  to  introduce  the  bill  into  the  House  as  an 
original  measure  and  upon  the  ground  that  it  was  a  committee 
bill. 

Some  declared  that  they  would  not  support  the  bill  on  the  floor 
of  the  House  if  it  had  the  name  of  the  honorable  gentleman  from 
Minnesota  [Mr.  McCleary)  upon  it,  giving  as  a  reason  that 
'•there  was  not  a  single  substantive  proposition  in  the  bill  origi- 
nated by  him,"'  so  that  not  even  the  name  of  Mr.  McCleary  ap- 
pears, who  very  much  desired  that  his  name  should  go  on  the  bill, 
but  instead  the  name  of  Mr.  Walker,  who  protested  against  his 
name  going  on  the  bill  he  was  so  much  opposed  to. 

The  action  of  the  honorable  gentleman  from  Connecticut  [Mr. 
Hill]  and  the  honorable  gentleman  from  Minnesota  [Mr.  Mo- 
Cleary],  in  forcing  H.  R.  10289  out  of  the  committee  and  on  to 
the  Calendar  of  the  House,  on  June  15,  1898,  was  so  indefensible 
that  the  honorable  gentleman  from  Minnesota  himself  made  a 
motion  at  the  meeting  of  the  committee  on  June  24, 1898,  that  the 
bill  be  withdrawn  from  the  House,  which  motion  was  adopted 
without  a  dissenting  vote,  but  instead  of  doing  so,  by  the  advice 
of  the  honorable  gentleman  from  Connecticut  [Mr.  Hill]  and  the 
lobby  of  Mr.  Hanna,  he  did  not  withdraw  the  bill  until  again 
directed  to  do  so  seven  months  after,  and  again  by  a  unanimous 
vote  of  the  committee,  passed  on  January  11,  1899.  He  then  de- 
layed it  as  long  as  possible,  until  January  17. 

SIX  SUPPORTERS  OUT  OP  SEVENTEEN   MEMBERS. 

On  January  18  the  friends  of  the  bill  could  only  rally  0  votes 
out  of  17  on  the  motion  to  favorably  report  the  bill.  The  unwar- 
ranted action  in  reporting  the  bill  to  the  House  on  June  1"),  1898, 
for  which  the  gentleman  from  Connecticut  [Mr.  Hill]  and  the 
gentleman  from  Minnesota  (Mr.  McCleary  |  were  principally 
responsible,  together  with  the  unwarranted  statements  or  the 
Hanna  lobby  as  to  its  being  rightfully  before  the  House  and  of  its 
"having  the  support  of  a  majority  of  the  committee."  determined 
those  who  were  known  to  the  lobby  and  to  every  member  of  the 
committee  to  be  opposed  to  the  bill,  but  who  proposed  to  assist  in 
g(  i  ting  the  bill  before  the  House  for  discn  i  withdraw  even 

that  action,  which  left  only  the  vote  of  its  suppi  irters,  G  out  of  17, 
in  favor  of  the  bill. 
BBU 


10 

MEMDEIis   who   IMMORTALIZED  THEIR   NAMES  ON    BANKING   BILLS. 

So  this  old  world  wags,  and  man  suffers.  By  one  of  those 
unlooked-for  and  inexplicable  but  common  disasters  in  the  tide 
of  human  affairs,  the  honorable  gentleman  from  Minnesota  [Mr. 
M(  <  'it  \ky  |  is  left  solitary  and  alone.  While  the  honorable  gen- 
tleman fr-iin  Connecticut  [Mr.  Hill'  and  the  honorable  gentle- 
man from  New  York  [Mr.  Mitchell'  .  by  culling  bills  from  those 
prepared  by  i  ithermen,  have  attained  their  great  ambition, and  their 
onalities  will  stand  foreverruore  high  in  the  temple  of  fame, 
by  having  their  names  written  on  the  front  of  bills  favorably  re- 
ported to  the  House,  to  die  on  the  Calendar  with  their  merits  un- 
sung, the  honorable  gentleman  from  Minnesota  [Mr.  McCleary], 
equally  persistent  and  deserving,  is  compelled  to  return  to  his 
constituents  with  the  embarrassments  of  the  campaign  of  1898 
still  attending  him  in  being  unable  to  say  on  the  stump,  "  Now, 
ladies  and  gentlemen.  I  will  address  you  a  few  words  on  a  banking 
bill  that  hapj. ens  to  bear  my  name."  This  is  not  the  fault  of  the 
chairman,  for  I  struggh  d  hard  to  keep  my  name  off  and  put  his 
name  on  the  bad  bill  that  has  been  erroneously  and  unfairly  called 
the  McCleary  bill. 

Mr.  ( '<  >X.     Mr.  Speaker 

Mr.  WALKER  of  Massachusetts.     I  decline  to  be  interrupted. 

Tin  SPEAKER  pro  tempore.  Does  the  gentleman  from  Massa- 
chusetts >  it-id  to  the  gentleman  from  Tennessee? 

Mr.  WALKER  of  Massachusetts.  I  decline  to  be  interrupted 
by  the  gentleman  from  Tennessee. 

Mr.  C(  )X.     1  should  like  to  put  a  question  to  him.     If  he  is  go- 
ing to  tell  what  the  committee  did,  1  want  a  chance  to  tell  what 
committee  did. 

Mr.  WALKER  of  Massachusetts.  I  decline  to  yield.  The  gen- 
tleman  made  his  speech  yesterday.     Mr.  Speaker,  I  wish  to  say 

Mr.  ('<  )X.     If  the  gentleman  will  pardon  me 

Mr.  WALKER  of  Massachusetts.  No;  I  will  not  "pardon" 
him  for  a  moment,  if  it  is  to  come  out  of  my  time.  If  I  can  have 
the  time  gentlemen  can  interrupt  me  as  much  as  they  like,  and  I 
will  then  invite  interruption. 

Every  man  who  was  a  member  of  the  Indianapolis  commission 
knew  within  twenty-four  hours  after  that  bill  was  reported  to  this 
House  that  it  was  irregularly  reported.  They  knew  that  a  member 
of  the  committee  [Mr.  McCleary]  was,  by  unanimous  vote,  di- 
rected to  withdraw  it  from  the  House.  They  knew,  furthermore, 
that  it  was  not  reported,  even  in  the  irregular  manner  in  which 
it  was  reported,  approved  of  by  a  majority  of  that  committee. 
They  knew  that  there  were  only  7  persons  out  of  17  who  made  any 
pretense  of  a  purpose  to  support  that  bill  on  this  floor. 

Knowing  the  fact,  t  he  circular  which  I,  with  others  who  were 
in  the  Indianapolis  convention,  received  makes  the  following  state- 
ment: 

CIRCULAR   I.l'.TTIK   OP   II.    II.    HANNA,   JULY   16,   1808. 

"  The  result  obtained  in  agreement  <  >n  the  part  of  the  majority7  of 
this  committee  was  only  accomplish!  d  after  very  thorough  and 
austive  labor. 

•Tin  bill  reported  by  the  committee  is  a  greater  step  in  the  right 
direction  than  the  business  men  of  the  country  had  reason  to  ex- 
would  be  secured  at  this  early  stage  in  the  progress  of  the 
work. 

'To  measure  the  present  condition  it  is  only  necessary  to  say  that 
very  reasi  m  to  believe  that  the  President  and  all  thelead- 


11 

ing  Administration  Republican  Senators  and  Congressmen  and 
the  L50  m  imbers  of  the  Eouse  who  signed  the  petition  qow  stand 
united  in  support  of  the  general  principles  of  the  committee's  bill." 

This  statement  as  to  the  President  is  very  remarkable.  Not  the 
slightest  warrant  for  any  such  statement  has  yet  been  presented 
to  the  people. 

Again  Mr.  Hanna  says  in  his  remarkable  letter: 

Plans  will  lio  formulated  In  due  time  in  order  that  the  busini  >t  the 

country  may  supplement  the  regular  organization  for  work  in  the  weak  letr- 

islat i  r        

Aha  !    Why  should  not  every  member  of  Congress  who  desired 

reelection  support  the  Hanna  bill  by  adoption  i  II.  I;.  10289)  when 

theyknowtherewas$50,000,$l00,00  l.perha  000,  behind  their 

n'.j    Chairman  Walker's  four  principles  of  reform  em- 

bodii  din  a  bill  had  only  "a  conscience  void  of  offense  "  in  allegiance 
to  solid  truth,  behind  them.  Mr.  Hanna  promises  them  not  only 
the  Congressional  life  that  now  is,  but  that  which  is  to  come,  as 
a  reward  lor  their  vote;  any  supporter  of  Mr.  Walker's  bill,  de- 
feat, perhaps. 

Where  a  man  did  not  pledge  himself  to  support  the  bill  fH.  R. 
10289)",  so  far  as  my  information  goes,  his  defeat  was  desired  by 
Mr.  Hanna,  as  is  shown  by  the  extracts  from  the  letters  read. 

REJOICED  IN  WALKER'S  DEFEAT. 

Furthermore,  there  was  scarcely  a  paper  in  this  country  that  was 
in  the  Bpecial interest  of  that  commission  but  that  was  made  to 
believe  that  my  objection  to  the  principles  upon  which  bill  10289 
was  drawn  was  factious.  Because  I  believed  they  would  make 
confusion  worse  confounded,  would  make  panics  more  intense  and 
would  bring  them  on  faster,  and  would  fasten  the  present  iniqui- 
tous system  on  the  country  more  securely  than  now,  they  were 
made  to  rejoice  in  my  defeat . 

All  over  this  country  papers  were  rejoicing  in  my  defeat.  There 
is  another  fact  that  is  very  significant. 

Where  there  was  one  paper  rejoicing  in  my  defeat  there  were 
ten  papers,  fair  and  candid,  that  contained  compliments  to  me 
such  as  I  never  expected  to  receive  from  my  countrymen,  in  the 
expr<  ssion  of  their  regret  that  I  was  no  longer  to  be  a  member  of 
this  House,  and  I  take  special  pride  in  what  was  thus  said  of  me. 
I  received  a  letter  from  Mr.  Hanna  on  this  matter.  1  wrote  him 
frankly  a  letter  that  I  insert  in  the  Record: 

LETTER   TO   MR.    II.    II.    HANNA. 

Worcesticu,  Mass.,  November  '.'?,  1S9S. 

My  Dear  Sir:  I  was  pleased  to  receive  your  letter  of  Novem- 
ber is. 

I  have  lived  too  long  to  concern  myself  with  the  newspaper 
stories  written  by  the  enterprising  ''space  men."  1  saw  not  the 
slightest  hint  of  such  a  thing  as  you  Sugg 

1  presume  by  tins  time  you  have  received  the  documents  T  Bent, 
but  should  they  fail  to  reach  you  please  let  me  know  and  I  will 
send  other  copies. 

Very  truly  yours,  J.  H.  WALKER. 

Hon.  H.  H.  Hanna.  Indianapolis,  Th<1. 

1  did  not  see  his  hand  in  my  district.     I  did  not  see  it.  because 
I  did  not  look  for  or  care  for  any  "hand."    I  was  defeated,  and 
thai  wasenough.     No  man  ever  knew  me  to  undertake  the  care 
of  dead  horses.     I  prefer  to  feed  live  o 
8812 


12 

Mr.  OVERSTREET.     Will  the  gentleman  yield  to  me  for  an 

inquiry? 

Mr.  WALKER  of  Massachusetts.     Certainly. 

Mr.  I  >VERSTREET.  I  will  ask  the  gentleman  if  Mr.  Hanna 
did  not  teii.lt  r  his  services  in  aid  of  his  reelection? 

Mr.  WALKER  of  Massachusetts.  I  have  said  he  did,  and  he 
is  a  man  who  means  what  he  says. 

Mr.  <  >VERSTREET.  Did  not  he  do  it  in  a  letter,  and  did  not 
you  reply  thanking  him  and  stating  that  you  did  not  think  that 
you  would  have  any  trouble? 

Mr.  WALKER  of  Massachusetts.  I  paid  no  attention  to  my 
canvass,  not  making  a  speech  in  my  district.  I  was  in  New 
Hampshire.  I  think"  he  did.  I  am  not  speaking  especially  of  my 
own  district.  That  very  fact  still  further  enforces  the  truth  of 
my  contention. 

Mr.  OVERSTREET.  I  understood  you  stated  it  in  a  manner 
that  left  the  impression  that  the  organization  of  which  he  was  the 
head  had  taken  some  steps  toward  your  defeat. 

Mr.  WALKER  of  Massachusetts.  My  point  is  this:  Those  who 
favored  his  bill  l  II.  R.  10289)  all  over  the  country  and  the  men  in 
my  district  as  well 

Mr.  OVERSTREET.     You  do  not  pretend  to  say 

Mr.  WALKER  of  Massachusetts.  I  do  not  pretend  to  say  that 
he  personally  undertook  to  do  anything  against  me  in  the  district, 
but  by  my  friends  all  over  this  country  it  was  understood  that 
those  who  were  seeking  reelection  to  seats  in  this  House  and  were 
not  in  favor  of  the  bill  (H.  R.  10289)  were  a  hindrance  to  nion- 
etarv  reform,  as  it  is  called,  and  I  among  the  number. 

The  SPEAKER  pro  tempore.  The  Chair  will  state  to  the  gen- 
tleman from  Massachusetts  that  he  has  consumed  the  first  thirty 
minutes  of  his  hour. 

******* 

THE  CAUCUS   COMMITTEE  OF    ELEVEN. 

I  will  not  delay  the  House  much  longer  this  morning,  as  I  have 
the  right  to  extend  my  remarks  in  the  Record.  I  wish  to  be  no- 
tified again,  after  ten  minutes,  so  that  I  can  yield  to  others  a  part 
of  my  time  and  save  my  last  ten  miniates  to  reply  to  them. 

Mr.  Sneaker,  a  very  peculiar  thing  has  resulted  in  the  attempt 
on  the  part  of  the  Republicans  of  this  House  to  secure  a  special 
committee  to  consider  this  great  question  during  the  vacation. 

It  is  hard  1o  suppress  a  Roman  virtue  in  a  man  like  the  gentle- 
man from  Ohio  [Mr.  Grosvexor].  Listen  to  the  prologue  and 
then  we  will  see  the  play: 

[Washington  Post,  February  3, 1899.] 

A  CAUCUS  OX   FINANCE     STRONG   SHOWING    FOB   MONETARY  LEGISLATION  IX 
SOUSE  -TO   NAME   A  COMMITTEE  OF  ELEVEN. 

General  Henderson  made  a  strong  speech  in  supportof  the  plan 
embodied  in  his  resolution,  and  pointed  out  the  advantage  of  hav- 
ing this  important  subject  committed  to  a  body  serving  both  in 
this  Congress  and  the  next,  and  representing  the  various  sections 
of  the  country,  and.  as  far  as  possible,  its  diverse  business  and 
economic  interests. 

CANNON   IN   DOUBTFUL  MOOD. 

Mr.  CANNON  said  he  did  not  think  any  financial  legislation  could 
be  carrie, i  through  until  after  the  next  Presidential  election. 

I;  presentative  Payne  said  it  would  permit  careful  considera- 
tion of  the  question  during  the  coming  mouths,  and  the  prepara- 
3812 


13 

tion  of  such  a  well-matured  plan  as  would  commend  itself  on  all 
hands. 

Resolved,  That  a  committee  of  eleven  members  of  the  present 
House  of  Representatives,  wBo  are  members  of  the  Fifty-sixth 
Congress,  shall  be  appointed  by  the  chairman  of  this  caucus  for 
the  purpose  of  considering  monetary  legislation  and  submitting 
their  recommendations  to  a  Republican  caucus  at  the  first  session 
of  the  Fifty-sixth  Congress,  with  authority  to  confer  with  a  like 
committee  from  the  Senate.    Adopted. 

[Washington  Evening  Star,  February  1G,  1899.] 

FOR   CURRENCY  REVISION-   REPUBLICAN    COMMITTEE  SELECTED    EY   EEPRB" 

sr.vi'ATi  vi:  QROSVENOR 

Representative  GROSVENOR,  of  Ohio,  chairman  of  the  Republi- 
can caucus,  has  announced  the  appointment  of  the  following  Re- 
publicans  of  the  House  as  members  of  the  committee  provided  by 
the  resolution  of  the  Republican  caucus  on  currency  legislation: 
Representatives  Henderson,  of  Iowa;  Payne,  New  York;  Dal- 
7.1:1.!  .  Pennsylvania;  Kerr,  Ohio;  Hawxey,  Texas;  Lovering, 
jachusetts;  Overstreet,  Indiana;  Curtis.  Kansas;  Loud, 
California;  Babcock,  Wisconsin,  and  MORRIS,  Minnesota. 

It  will  be  observed  that  no  member  of  the  Banking  and  Cur- 
rency Committee  or  the  Coinage,  Weights,  and  Measu:  unit- 
tee  is  put  upon  this  committee.  Referring  to  this  fact,  Represent- 
ative Grosvenor  said: 

"I  made  the  appointments  in  that  way  after  full  and  free  con- 
ference with  most  of  the  members  of  the  committees  and  with 
prominent  members  of  the  House.  It  must  not  be  for  a  moment 
understood  that  the  omission  of  members  of  these  committees  from 
the  caucus  committee  was  intended  to  in  anywise  reflect  upon  the 
distinguished  gentlemen  who  compose  these  two  great  commit- 
and.  on  the  contrary,  the  idea  prevailed  that  inasmuch  as  any 
bill  or  bills  which  might  be  agreed  upon  by  the  Republican  caucus 
would  have  to  go  to  one  or  both  of  these  committees  for  their  final 
action  and  report,  it  would  be  unwise  to  ask  these  gentlemen  to 
make  any  decision  or  take  sides  in  any  way  upon  any  dispute  of 
policy  or  detail,  and  it  was  deemed  wisest  and  best  that  the  com- 
mittees should  remain  wholly  independent  and  noncommittal  as 
to  the  details  of  the  report,  and  be  free  to  act  independently,  with 
the  final  judgment  of  each  number  iminnuenced  and  unaffected 
by  the  action  of  the  caucus  committee.  In  this  way  we  will  ulti- 
mately have  the  opinion  of  the  caucus  committee  of  11  members 
of  the  House  and  of  such  committees  as  the  Senate  may  see  fit  to 
provide,  and  then  the  deliberate  judgment  of  the  proper  committee 
of  the  House." 

Mr.  Speaker,  so  it  appears  that  the  caucus  believed  the  committee 
of  11  wastoconsider  monetary  legislation— to  permit  careful  con- 
sideration—to  present  a  well-matured  plan  that  would  commend 
itself  to  all. 

"A   DANIEL  comk  To  JUDGMENT." 

Now  as  to  how  tbe  gentleman  [Mr.  Grosvenor]  succeeded, 
"I  made  the  appointment  (of  the  11)  in  that  way  after  full  and 
free  conference  with  most  of  the  members  of  the  commi 
*  *  *  and  it  was  deemed  wisest  and  best  *  *  *  not  tot  dee 
sides  in  any  way  on  any  disputed  policy  or  detail,"  and  much  more 
of  the  same  sort.  Verily,  "a  Daniel  come  to  judgment."  Now 
for  the  play. 

Mr.  Speaker,  of  that  committee  of  11  that  were  appointed,  G  of 
8812 


14 

tlie  11.  a  majoritv.  have  concluded  the  whole  question.    Of  the 
205  Republicans  "in  this  House,  it  is  reported  by  the  Monetary 
Commission  that  150  signed  a  paper  requesting  the  consideration 
of  bill  11.  R.  10289  to  present  to  the  Speaker;  55  signed  no  paper. 
I  have  been  over  these  papers  very  carefully,  and  5?  strongly 
I  their  unqualified  support"  on  the  floor  of  the  House  to 
ill  11.  R.  L0289.     N<>\v.  I  believethat  there  has  been  some sug- 
ased,  of  course  honorable,  to  conclude  this  ques- 
tion 1"  fore  it-  c  ation  is  begun,  and  that  it  emanates  from 
the  very  enthusiastic  but  injudicious  members  of  the  Monetary 
Commission,  Mr.  Hanna,  or  men  who  are  operating  here  for  him. 
members  of  that  committee  have  already  pledged  their  un- 
qualified support  to  that  bill.     Curiously  enough,  out  of  the  whole 
93  that  requested  only  "consideration'"  of  that  bill,  but  did  not 
"pledge  support,"  not  one  is  appointed  on  this  committee  of  11. 

Mr.  <  <  M  (PER  of  Wisconsin.  What  committee  is  the  gentleman 
speaking  of  r 

PLEDGED  IN   ADVANCE. 

Mr.  WALKER  of  Massachusetts.  The  committee  of  11,  which 
the  honorable  gentleman  from  Ohio  [Mr.  Grosvenor]  appointed 
to  consider  the  financial-reform  question  and  to  settle  it  during  the 
recess.  The  question  is  thus  concluded  before  it  is  begun.  A 
rity  of  the  11  are  already  pledged  to  support  the  bill  H.  R. 
10289.  They  are  put  on  that  committee,  and  not  a  man  is  put  on 
out  of  the  93  Republicans  who  requested  ••consideration." 

Mr.  Grosvexor  rose. 

Mr.  WALKER  of  Massachusetts.  The  gentleman  from  Ohio 
had  better  wait,  for  I  have  considerable  more  to  3ay,  and  he  may 
a-  well  reply  to  two  or  three  things  at  one  time. 

Mr.  (4 R<  )SVEN<)11.     Oh,  no;  1  shall  not. 

Mr.  \VA  LKER  of  Massachusetts.  Now,  upon  any  doctrine  of 
chances  in  the  selection  of  these  men,  is  it  not  conceivable  that 
out  of  205,  6  men  of  11,  from  57  pledged  and  not  one  out  of  93 
unpledged,  should  have  been  chosen,  without  it  was  by  some 
one  who  had  carefully  examined  these  petitions  and  had  selected 
these  6  men  '-because  they  were  pledged,"  and  thus  conclude  this 
whole  question  by  a  pledge  given  over  their  written  signature? 
I  want  to  say  with  reference  to  the  honorable  gentleman  from 
achusetts,  my  colleague  [Mr.  LoveringJ.  who  is  one  of  the 
"pledged"  men  put  on  the  committee,  that  there  is  no  man  in 
Massachusetts  that  is  considered  of  higher  honor  than  he,  and 
when  he  givi  s  his  word  it  is  as  good  as  his  bond,  and  when  he  puts 
his  name  to  a  written  promise  to  do  a  thing  he  will  do  it,  and  I  be- 
ll' •vc  that  is  true  of  the  other  5  pledged  men  on  the  committee. 

The  honorable  gentleman  from  Ohio  [Mr.  Kerr],  the  honorable 
gentleman  from  Indiana  [Mr.  Overstreet],  the  honorable  gen- 
i  'Man  from  Kansas  |  Mr.  Curtis]  .  the  honorable  gentleman  from 
Wisconsin  [Mr.  Babcock],  the  honorable  gentleman  from  Minne- 
sota [Mr.  Morris].  Mr.  Hanna  can  surely  rely  on  the  honor  of 
every  one  of  these  gentlemen  to  keep  his  written  pledge  to  support 
bill  H.  R.  10289,  with  absolute  confidence. 

SOME  ONE  WHO   "KNEW   HIS   BUSINESS"   SELECTED  TnE  COMMITTEE. 

By  any  doctrine  of  chance  it  is  not  conceivable,  I  again  say, 

that   these  men  should  have  been  selected  as  they  have  been 

unless  it  was  by  some  man  who  had  carefully  examined 

I  petitions.     This  was  not  a  matter  of  chance.     Some  one 

"knew  his  business  like  a  book."    This  thing  could  not  happen 

lance  once  in  a  million  trials. 

8812 


15 

Again,  the  names  of  those  six  men  indicate,  if  they  are  leading 
members  of  this  I  [onse,  what  is  occasionally  claimed  on  this  floor, 
viz,  that  there  has  been  great  unfairness  upon  the  part  of  the 
Speaker  of  this  House.  If  this  committee  was  appointed  from  the 
leading  members  of  the  House,  as  it  was  supposed  to  be,  ihey 
ought  to  have  held  chairmanships  of  or  high  places  on  committees. 
The  average  service  of  these  gentlemen  in  this  Houso  is  just  two 
terms.  The  honorable  gentleman  from  Iowa  [Mr.  Bendebson] 
is  also  understood  to  be  one  of  the  most  enthusiastic  supporters 
of  H.  R.  10289,  makes  seven. 

What  becomes  of  the  gentleman  from  Illinois  [Mr.  Cannon],  as 
a  leading  member  w  10  has  served  twenty-four  years;  of  the  gen- 
tleman from  Illinois  j  Mr.  Hitt],  who  has  served  eighteen  years;  of 
the  gentleman  from  Illinois  [Mr.  Hopkins]  .  fourteen  of  the 

gentleman  from  Ohio  [Mr.  Burton],  six  years;  of  the  gentleman 
from  Minnesota  [Mr.  Tawney],  who  has  served  six  years?  And 
where  is  the  gentleman  from  North  Carolina  [Mr.  LlNNEY],  who 
has  served  four  years— who  ought  to  be  on  to  represent  the  South 
as  well  as  the  gentleman  from  Texas  [Mr.  Hawley]?  The  total 
service  of  these  six  supposed  leaders  is  seventy-two  years  and  an 
average  of  twelve  years.  Now,  that  shows  that  these  six  gentle- 
men appointed  by  the  gentleman  from  Ohio  [Mr.  Geosvenob] 
have  been  painfully  neglected  by  the  Speaker  of  this  House,  for 
most  of  them  have  not  been  made  chairmen  nor  are  near  the  head 
of  their  committees. 

What  is  still  more  humiliating,  they  average  to  be  in  the  sixth 
position  on  the  committees  on  which  they  are  placed.  After  taking 
the  five  leading  men  in  the  House — the  honorable  gentleman  from 
New  York  [Mr.  Payne],  the  honorable  gentleman  from  Pennsyl- 
vania (Mr.  Dalzell],  the  honorable  gentleman  from  Texas  [Mr. 
Hawley],  and  the  honorable  gentleman  from  California  [Mr. 
Loud] — who  average  a  service  of  ten  years,  the  pledge  to  support 
H.  R.  10289  seems  to  have  been  an  inexorable  condition  requi- 
site in  the  other  six  of  the  committee  of  11.  The  difficulty  arose 
because  few  of  the  older  members  in  the  House  are  in  the  habit  of 
pledging  themselves  to  measures  they  do  not  fully  understand. 

What  I  am  trying  to  say  is  not  that  these  gentlemen  are  not 
the  leaders  of  the  House,  but  that  injustice  has  been  done  them 
in  the  distribution  of  chairmanships  and  high  places  on  commit- 
tees of  this  House,  as  indicated  by  the  honorable  gentleman  from 
Ohio  [Mr.  Gb<  SVENOB  ] .     That  is  my  contention. 

Mr.  GROSVENOR.    Mr.  Speaker 

Mr.  WALKER  of  Massachusetts.  I  yield  to  the  gentleman, 
but  I  do  not  want  it  to  come  out  of  my  time,  because  it  is  very 
short. 

Mr.  GROSVENOR.  I  will  be  very  brief.  Mr.  Speaker.  I  want 
to  say  first  that  I  had  no  knowledge  that  any  one  of  th  n- 

tlemen  named  either  did  or  did  not  sign  any  petition  in  n  gard  to 
any  bill.    Second,  I  did  not  ask  anyone  of  all  those  gen tl  ay 

Question  as  to  how  he  stood  upon  any  bill  or  any  phase  of  the 
financial  question.  Third,  no  man  outside  of  the  members  of 
the  House  suggested  to  me  th"  name  of  any  man  that  I  put  upon 
that  committee;  and  fourth,  I  say  that  my  observation  of  the 
committers  of  this  House  leads  /me  to  believe  thai  tin  re  i-~  n- 

ally  a  gentleman  in  the  Bouse  who  is  not  a  chairman  of  any  com- 
mittee, but  who  knows  asmucb  as  theaverage  gentlemen  who 
are  chairmen  of  committees.     [Laughter.] 
8813 


16 

A  SAFE   METHOD   OF   APPOINTING   P.EFEP.F.I  < 

Mr.  WALKER  of  Massachusetts.  Now,  Mr.  Speaker,  in  reply 
to  that  I  want  to  .say  that  my  whole  c  mtention  was,  and  is  now, 
that  the  gentleman  [  Mr.  (  I-eosvenor]  did  not  examine  those  sig- 
natures, but  that  somebody  in  interest  did.  That  is  sure.  There 
is  no  man  in  this  House  who  believes  that  those  men  could  have 
1  een  appointed  in  this  peculiar  and  wonderful  manner  unless 
somebody  knew  how  they  stood  on  those  petitions.  Mr.  Speaker, 
was  once  a  reference  case  of  a  friend  of  mine.  After  the 
referees  were  appointed;  1  went  to  the  man  who  was  instrumental 
in  having  the  case  referred  and  said.  "  What  do  you  think  about 
the  decision?  I  am  afraid  it  will  go  against  my  friend."  "Oh,"' 
said  the  man  to  whom  1  was  talking.  •■  it  is  well  enough  when  you 
have  a  reference  to  know  how  men  will  decide  before  you  select 
them."  | Laughter.]  It  must  have  been  agreed  upon  before  the 
caucus  was  called — it  was  agreed  upon  somewhere— who  should 
be  members  of  this  committee  of  eleven.  That  is  just  as  sure  as 
anything  can  be  that  is  unproven. 

MR.   1IANXA   IS  PLEASED. 

Mr.  Speaker,  Mr.  H.  H.  Hanna  is  "'pleased,"  and  that  ought  to 
settle  it.  He  probably  knew  he  was  going  to  be  pleased.  He  did 
not  wait  until  the  16th  of  February,  when  the  committee  was 
publicly  announced,  but  he  was  pleased  on  the  14th,  two  days 
before  the  committee  was  appointed,  and  in  season  to  send  the  fol- 
lowing circular  letter  on  that  day: 

Indianapolis,  February  14,  1899. 

Dear  Mr. :  You  have  undoubtedly  seen  in  the  papers  the 

past  few  days  a  report  of  the  action  of  the  Republican  caucus  last 
:.  This  action  was  brought  about  at  request  of  your  corn- 
mil  tee.  *  *  *  It  is  just  and  proper  to  say  that  the  success  of 
this  caucus  was  made  possible  by  the  influence  of  the  President 
and  the  Speaker  of  the  House  and  Senator  Aldrich,  who  is  acting 
chairman  of  the  Finance  Committee  of  the  Senate.  *  *  *  This 
step  is  taken  in  order  to  avoid  delay  incident  to  discussing  and 
reporting  of  measures  by  the  regular  committees  of  both  Houses 
in  the  next  session.  *  ::"  *  The  truth  is,  that  the  step  taken  is 
a  very  great  one  in  the  interest  of  monetary  legislation. 

The  work  to  this  time  has,  of  course,  been  continuously  con- 
fronted with  barriers  that  seemed  extremely  difficult  to  overcome. 
It  is  now  probable  that  whatever  is  agreed  upon  by  these 
committees  and  recommended  to  Congress  in  the  next  session,  will 
be  important  features  in  the  direction  of  laws  for  which  your  or- 
ganization  has  so  earnestly  appealed  for  the  past  two  years. 

<  Congratulating  you  upon  the  progress  made  in  the  work  to  this 
time.  *  ;:"  *  and  with  assurance  of  personal  gratitude  and  re- 
gards of  the  writer. 

Faithfully  yours,  H.  H.  HANNA,  Chairman. 

"Barriers"  is  good;  "at  the  request  of  your  committee"  is 
still  better,  and  enjoyed  by  all  of  us  because  it  is  so  complimen- 
tary to  us. 

MR.   GROSVENOR'S  GIFT  OF  FKOPHECY. 

Mr.  Speaker,  the  key  to  the  situation  may  be  found  in  what 
the  honorable  and  very  distinguished  gentleman  from  Ohio  [Mr. 
■  'i:J  tellsus — thatheconsulted  only  members  of  the  House 
in  making  up  his  now  famous  committee  of  eleven.     This  infor- 
mation gives  us  a  clue  to  learn,  "Who  am  der  pusson  what  put 
3f  12 


17 

(1pm  cheekine  in  the  ge'man's  hat."  Nevertheless  and  notwith- 
standing, the  honorable  gentleman  seems  to  have  laid  a  fairly 
solid  foundation  upon  which  to  rest  his  extraordinary  gift  of 
pr<  »pkecy  in  foretelling  win  it  his  committee  will  do. 

Mr.  Speaker,  perhaps  Si  nator  A.ldrii  'ii  and  the  other  members 
of  the  Senate  Finance  Committee  will  make  a  part  of  a  great 
"finance,  bank,  and  currency  committee  of  tho  two  Houses"  to 
approve  bill  H.  R.  10289.  On  the  other  hand,  perhaps  they  will 
wait  until  the  eleven  leading  members  of  the  House  take  their 
rightful  places  as  distinguished  Senators  before  they  think'  it  ad- 
visable to  saddle  the  Republican  party  of  the  country  with  the 
Indianapolis  .Monetary  Commission,  the  11.  H.  Hanna lobby,  and 
the  bill  IT.  R.  L0389.  Again,  by  what  authority  does  Mr.  Hanna 
speak  for  the  President,  the  .rot  the  II   immiv  for  Senator 

A.LDRK  b?  They  have  the  same  means  of  making  their  views 
known  to  the  public  as  has  Mr.  Hanna.  I  can  not  believe  they 
are  responsible  for  the  report  of  them  that  Mr.  Manna  makes.  I 
fear  bis  enthusiasm  has  again  outstripped  his  discretion. 

Another  thing:  I  was  told  that  the  reason  why  I  was  not  called 
into  the  Speaker's  room  and  consulted  as  to  what  was  best  for  the 
party  and  best  to  be  done  for  the  country  under  the  circumstances 
was." that  I  was  not  elected  to  the  Fifty-sixth  Congress.  Was  Mr. 
If.  II.  Hanna  who  was  called  in  elected  to  the  Fifty-sixth  Congress? 
Is  he  even  a  member  of  the  present  Congress.  I  have  never  seen 
his  name  on  the  roll.  Is  he  a  sure  member  of  the  Fifty-sixth  Con- 
gress? 

Mr.  SULZER.    He  could  not  be  elected  on  his 

HIGH    REGARD   FOB    MR.    II  \ v  ^  K. 

Mr.  WALKER  of  Massachusetts.    I  am  told  that  Mr.  Hanna 

was  urged  to  come  here  as  Congressman  by  the  unanimous  senti- 
ment of  the  Republicans  of  his  district,  but  he  could  not  thus  sac- 
rifice this  great  reform;  that  he  was  also  wanted  for  Senator,  but 
that  bis  position  as  a  monetary  reformer  would  have  been  com- 
promised if  he  had  accepted.  But  I  am  grieved  to  notice  that  his 
candidate.  Judge  Taylor,  was  not  elected  Senator  from  Indiana, 
for  he  seemed  to  me  a  very  able  man.  I  say,  in  all  frankness,  that 
from  what  I  have  seen  of  Mr.  Hanna,  I  believe  he  is  sufficiently  in- 
terested in  this  reform  to  refuse  a  seat  on  this  floor  or  in  the  Senato 
to  secure  it.     I  am  saying  this  because  I  believe  it. 

I  have  the  highest  regard  for  Mr.  Hanna,  as  I  have  for  Mr.  Gnth- 
ridge,  but  I  have  observed  the  mistaken  way  they  have  lobbied  this 
House,  taking  men  by  the  buttonhole  and  begging  and  pleading 
with  them  to  support  a  bill  neither  the  member  nor  themselves  un- 
derstood. 1  spent  a  month  of  solid  time  tryingtound<  rstand  this 
bill  H.  K.  10289,  at  least  six  hours  a  day.  and  there  were  four  ques- 
ts I  could  not  myself  solve.  After  my  study  of  the  bill  1  wrote 
to  the  authors  of  it  the  following  letters,  and  not  one  of  them  at- 
tempted to  meet  the  challenge.  I  say  to  this  House,  and  i  -;  ecially 
those  gentlemen  clamoring  for  reform,  as  to  my  minority  reporl  No. 
L575  and  as  to  the  speech  1  madeon  February  1 1,  that  l  challenged 
any  man  living  anywhere  to  successfully  controvert  a  single  state- 
ment of  fact  or  a  single  argument  therein  submitted.  1  haveissued 
this  challenge  to  members  of  the  commit  tee  m  t  lie  letters  quoted  and 

to  all  who  are  interested  in  bill  H.R.  10289,  and  not  one  of  them  has 
ptedthe  challenge.    Yet  they  vote  for  a  bill  of  whichitmaybe 
said  that  a  large  pari  of  their  lads  they  use  are  derived  from  canvas- 
back  and  terrapin  and  their  arguments  from  champagne,  and  tho 
381»- 2 


18 

It  of  their  bill  if  enacted  would  be  to  continue  the  robbery  of 

a  of  our  country.  This  is  my  statement  of 
it  to  this  and  the  country. 

Mr.  HILL.  I  remember  the  gentleman  having  written  a  let- 
ter  

Mr.  WALKER  of  Massachusetts.     Let  me  finish  this  statement. 

I  will  put  in  the  loiter.     The  gentleman  from  Connecticut  [Mr. 

Hill]  replied  be  was  just  startingfor  Porto  Rico  and  that  he 

would  attend  to  the  matter  when  he  got  back,  I  believe,  but  he 

ably  has  never  ••gotten  back''  officially. 

Mr.  il'iLL.    The  point  I  wanted  to  get  at  wasthia— -that  at  the  time 

an  wrote  that  letter  he  included  in  it  the  statement 

that  we  ought  all  to  fully  understand  the  measure,  so  that  we 

might  fairly  consider  it  when  it  came  up  for  discussion  in  the 

It  .use.     Is  not  that  correct? 

Mr.  WALKER  of  Massachusetts.  Why,  yes:  the  honorable 
ni  from  Minnesota  [Mr.  McCleary]  had  not  then  with- 
drawn the  bill.    I  said 

Mr.  HILL.  Just  let  me  proceed  for  an  instant.  I  want  to  put 
in  with  the  statement  the  gentleman  has  made  that  in  twenty- 
four  hours  after  that  the  l)ill  was  reported,  although  all  knew  that 
it  was  an  illegitimate  proposition,  an  impractical  and  improper  re- 
port, and  would  not  be  considered  by  the  House.  Now,  will  the 
gentleman  reconcile  these  statements? 

Mr.  WALKER  of  Massachusetts.  The  gentleman's  statement 
is  entitled  to  credit,  as  all  statements  made  by  him  are  undoubt- 
edly accurate  as  he  sees  them 

Mr.  HILL  (interrupting).  I  will  modify  it  and  ask  the  gentle- 
man to  explain  the  discrepancy  in  his  own  statement. 

Mr.  WALKER  of  Massachusetts  (continuing).  And  yet  the 
gentleman  from  Connecticut  is  so  constituted  that  everything  that 
into  his  imagination  is  verity  and  he  is  willing  to  swear  to 
it  as  the  truth.     [Laughh  r.  | 

Mr.  HILL.  Well,  my  imagination  does  not  demand  that  1  shall 
verify  or  even  try  to  reconcile  the  statements  of  the  gentleman 
from  Massachusetts.  (Laughter.]  I  ask  him  now  to  reconcile  the 
statement  he  makes  and  the  improper  reporting  of  the  bill. 

Mr.  WALKER  of  Massachusetts.  The  gentleman  is  a  little 
confused.  I  have  said  nothing  needing  "to  be  reconciled."  Mr. 
Speaker,  how  much  time  have  I? 

The  SPEAKER.     The  gentleman  has  occupied  ten  minutes. 

Mr.  WALKER  of  Massachusetts.  I  yield  live  minutes  to  the 
gentleman  from  Connecticut  [Mr.  HlLL.  | 

Mr.  11  ILL.     I  do  not  care  to  use  the  time. 

Mr.  WALKER  of  Massachusetts.  Mr.  Speaker.  I  will  now  put 
in  the  letters  sent  to  each  of  the  six  who  favored  H.  R.  10289. 

WK1TTKX    TO    HEHBEBS    OF    T1IK    COMJIITIEE    ON     BANKING    AND 

i   I  UKKNCY. 

New  Hampton,  N.  H.,  September  1,  1S0S. 
My  Dear  Sir:  I  am  employing  my  vacation  in  preparation  for 
the  discussion  in  the  House  of  H.  R.  1028'-).  I  am  trying  to  make 
a  very  exhaustive  analysis  of  the  various  propositions  that  have 
bee7i  submitted  to  our  committee  that  arc  liable  to  come  up  in  the 
Hon 

liing  can  be  gained  by  any  of  us  in  failure  to  do  justice  to 
the  propositions,  or  in  finding  ourselves  in  error  as  to 
any  provision  in  any  of  the  bills. 

38U 


19 

Wp  arc  associated  together  to  assist  each  other  in  thoroughly 
understanding  the  proposil  inns  submitted  to  us,  not  only  in  order 
to  decide  upon  which  is  best,  but  to  be  able  to  enlighten  the  H 
in  the  discussion  as  well. 

I  think  1  understand  all  the  propositions  in  bill  II.  R.  10389  ex- 
cepting as  to  a  lew  items,  as  follows: 

Paged,  lines  1  to  7:  Under  what  sections  and  lines  can  United 
States  notes  and  Treasury  notes  accumulate  in  the  department  of 
issue  and  redemption? 

Page  5,  lines  :!  to  '< :  Under  what  sections  and  lines  are  such 
notes  to  get  into  the  department  of  issue  and  redemption  in  order 
to  be  exchanged  for  gold  then  in  the  general  Treasury? 

Page  6,  lines  24  and  25,  and  page  7,  lines  1  to  7:  What  amount 

Of   United  States  notes  and  Treasury  notes  can  be  canceled  under 

on  8  or  any  other  Bection,  provided  all  the  existing  national 

banks  lake  out  the  full  amount  of  reserve  notes  required  and  no 

mi  »re? 

Page  15,  lines  9  to  18:  What  amount  of  United  States  notes 
will  have  been  canceled  and  destroyed  (or  the  probable  amount), 
as  herein  provided,  when  no  more  of  such  notes  are  available  as  a 
basis  for  the  issue  of  circulating  notes? 

Page  16,  lines  1  to  8:  What  funds  are  to  be  used  for  the  with- 
drawal of  reserve  notes,  and  how  do  they  get  into  the  department 
of  issue  and  redemption? 

Your  full  and  frank  replies,  from  your  familiarity  with  the 
bill,  will  save  me  a  great  deal  of  work. 
I  am,  very  truly,  yours, 

J.  II.  WALKER.  CJiairvian. 


Wor<  ester,  Mass..  November  W,  1898. 

DEAR  SIR:  I  send  you  to-day  three  papers  that  I  hope  will  receive 
your  most  thorough  and  critical  study.  I  went  upon  the  Com- 
mittee on  Banking  and  Currency  ten  years  ago  by  no  solicitation 
of  mine.  I  had  no  pet  t  heory  to  force  on  the  committee.  I  pro- 
posed no  bill  until  requested  to  do  so  by  the  chairman,  and  after 
Bon.  John  Sherman  not  only  had  declined  to  prepare  a  bill  and 
introduce  it  in  the  Senate,  but  had  expressed  to  me  a  belief  that 
the  national  system  of  banking  must  disappear  as  the  United  States 
bonds  were  paid  off.  I  had  made  the  subject  a  special  study  for 
many  years.  Since  then  I  have  given  nearly  my  whole  attention 
to  it  for  ten  years. 

The  bill  I  first  drew,  it  has  been  my  constant  study  to  improve 

the  best  possible  form  and  substance  to  express  the  experience 

of  the  world  in  banking  and  to  meet  the  habits,  prejudices,  and 

demands  of  our  own  people.    I  believe  my  investigations  have  been 

more  in  amount  and  thoroughness  than  those  of  all  other  men  in 

utry  put  together. 

Either  lam  right  or  my  errors  of  fact  and  conclusions  can  be 
readily  shown.  I  have  yet  seen  no  evidence  that  any  other  mem- 
ber of  the  committee  has  made  a  careful  study  of  the  effect  of  his 
own  bill  or  any  other  bill  before  the  committee,  by  "  trying  it  on  " 
to  the  present  banks  that  have  been  in  operation  more  than  thirty 
years. 

Several  membi  rs  of  the  committee  do  not  think  anything  n< 
to  I).'  done  but  to — 

First.  Reduce  the  tax  on  currency  one-half. 

Second.  Allow  cum  ncy  to  be  issued  to  the  par  of  bonds. 
8812 


20 

Third.  Allow  banks  of  $?.">,000  capital  in  small  places. 
Such  members  are  excused  from  investigating  my  general  bill. 
Not  so  with  others.  I  hope  you  will  take  t  he  time  and  do  the  work 
neci  ssary  to  present  to  the  committee  as  thorough  and  careful  an 
exhibit  of  the  two  bills,  H.  R.  10333  and  H.  R.  10289,  as  you  see 
them,  as  I  have  done  to  you,  if  you  favor  any  general  bill. 
Very  truly,  yours, 

J.  H.  WALKER,  Chairman. 

MB.  HILL'S  BILL  BEFORE  THE  COMMITTEE  ON   COINAGE. 

Mr.  Speaker,  I  have  several  quite  striking  instances  of  the  vivid 
imagination  of  the  honorable  gentleman  from  Connecticut  [Mr. 
Hill],  I  will,  however,  give  only  one  exhibit,  and  that  from  the 
hearings  before  the  Committee  on  Coinage,  Weights,  and  Meas- 
ures. The  honorable  gentleman  introduced  in  the  House,  on 
January  5,  1899,  a  bill  clearly  belonging  to  the  Committee  on 
Banking  and  Currency,  as  it  was  all  copied  from  bills  before  that 
committee,  except  two  or  three  comparatively  unimportant  sec- 
tions. He  had  no  compunctious  of  conscience  in  having  it  re- 
ferred to  the  Committee  on  Coinage.  Weights,  and  Measures,  of 
which  he  is  also  a  very  distinguished  member.  He  verily  believed 
at  the  time  he  was  doing  God's  service  in  so  framing  its  title  as  to 
carry  it  to  the  Committee  on  Coinage.  Weights,  and  Measures  un- 
less it  read  in  full  by  the  Speaker,  which  everyone  knows  he  never 
does  unless  requested  to  do  so. 

Scarcely  any  member  of  our  committee  knew  the  character  of 
the  bill,  if  there  was  one,  until  they  saw  in  the  papers  the  testi- 
mony of  Secretary  Gage  upon  it.  None  of  the  Committee  on 
Banking  and  Currency  supposed  the  Committee  on  Coinage, 
Weights,  and  Measures  would  act  on  such  a  bill  belonging,  as  it 
did,  to  the  Committee  on  Banking  and  Currency,  and  therefore 
did  not  call  th^  attention  of  the  House  to  the  error  of  reference. 
In  fact,  nearly  all  of  them  were  entirely  willing  that  the  honorable 
gentleman  from  Connecticut  should  transfer  the  field  of  his  pecul- 
iar labors  from  our  committee  to  that  on  Coinage,  Weights,  and 
Measures.  When,  however,  the  report  of  the  hearings  on  the  bill 
was  published,  and  especially  after  talking  with  several  members 
of  that  c<  immittee,  all  was  made  plain.  The  favorable  report  from 
the  Coinage,  Weights,  and  Measures  Committee  on  that  bill,  H.  R. 
11111.  was  made  on  three  grounds.  The  first  and  conclusive  rea- 
son to  fully  justify  the  committee  in  its  seeming  discourtesy  to 
the  Committee  on  Banking  and  Currency  was  furnished  by  the 
honorable  gentleman  from  Connecticut,  Mr.  Hill,  as  follows: 

FROM    THE    REPORT    OF    HEARING    BEFORE    COMMITTEE  ON    COINAGE,   ETC., 

JANUARY  12,  1899. 

"Mr.  HILL.  Mr.  Chairman,  my  reason  for  introducing  the 
bill  was  that  several  of  these  measures  covering  this  bill  were 
found  in  the  monetary-commission  bill  that  came  before  the  Com- 
mittee on  Banking  and  Currency,  and  it  was  ruled  there,  that  they  ■ 
were  properly  matters  for  the  Coinage  Committee  and  not  for 
that  committee.  I  have  therefore  formulated  them  very  nearly 
they  were  in  the  monetary-commission  bill.  '::"  *  *  At  a 
hi:  in  the  hearing  I  will  be  glad  to  give  my  reasons  for 

introducing  the  bill  at  all." 

Mr.  Speaker,  there  is  not  the  slightest  foundation  in  fact  for 
this  statement.     Not  only  was  there  no  such  "ruling"  by  the 
chairman  of  the  Committee  on  Banking  and  Currency,  but  there 
8  12 


21 

was  no  such  objection.  The  question  was  never  raised.  The 
chairman  did  remark  with  refer*  nee  to  the  Gage  bill  that  it  con- 
tained some  matter  that,  taken  by  itself  alone,  would  properly  lto 
to  the  Committee  on  Ways  and  Means.  It  is  impossible  thai  the 
gentleman  from  Connecticut  should  '•therefore  formulate"  the 
bill.  Every  one  of  the  provisions  copied  from  the  bills  before  our 
committee  by  the  honorable  gentleman  from  Connecticut  was  care- 
fully and  most  exhaustively  considered  by  our  committee.  Mr. 
Bill  being  very  decidedly  in  evidence  on  such  occasions.  The 
first  reason  to  justify  the  honorable  and  distinguished  gentleman 
from  Connecticut  therefore  falls  without  argument  or  further 
statement. 

The  second  reason  was  "to  carry  out  the  pledges  made  in  the 
St.  Louis  Republican  platform  in  1896,"  and  this  also  has  no  jus- 
tification in  lact. 

REPUBLICAN   PLATFORM  OF  II 

The  platform  of  the  Republican  convention  at  St.  Louis,  passed 
June  is,  1896,  reads: 

"  We  arc  opposed  to  the  free  coinage  of  silver  excepting  by  in- 
ternational agreement  with  the  leading  nations  of  the  world, 
which  we  pledge  ourselves  to  promote,  and  until  such  agreement 
can  be  obtained  the  existing  gold  standard  must  be  preserved." 

The  Republican  party  can  not  afford  to  have  such  measures  as 
H.  R.  1 1411  or  II.  R.  10289  forced  on  it.  They  are  not  Republican 
measures  in  that  they  would  retire  and  destroy  the  United  States 
legal-tender  notes. 

The  following  shows  the  folly  of  it  at  this  time,  even  if  it  were 
desirable  at  any  time: 

[New  Yuri;  Financial  Chronicle,  January  88,  ISO!).] 
We  have  already  once  tried  an  experiment  of  the  kind  the 
Coinage  Committee's  bill  proposes— that  is,  of  supplying  by  bank 
issues  the  want  for  currency  when  contracting  the  legal  tenders — 
and  failed  disastrously.  Why  should  we  be  so  forgetful  or  so 
venturesome  as  to  assume  we  shall  be  any  more  successful  now? 

To  supply  the  place  the  legal-tender  notes  had  filled  Cong] 
then,  as  now,  depended  upon  the  national-bank  notes.  It  was  a1 
that  time  as  safe  a  reliance  as  it  ever  could  be.  for  the  law  had 
been  changed  so  that  the  State  banks  were  tumbling  over  one 
another  to  get  into  the  system,  and  taking  out  notes  was  very 
profitable. 

How  the  arrangements  for  substituting  bank  notes  for  legal 
tenders  worked  at  that  time  is  quickly  told.  In  October.  1865, 
(the  last  bank  return  before  the  above  resolution  was  1  by 

( longress  I  the  national-bank  notes  outstanding  were  $171 ,321 ,90  ;. 
In  January,  1866,  the  amount  was  $213,239,530.  In  January,  1868, 
the  amount  outstanding  was  $294,377,390.  These  figures  show  a 
much  larger  addition  to  bank  notes  concurrently  with  the  with- 
drawal of  legal  tenders  than  is  contemplated  by  the  bill  the  present 
(  oiuaee  Committee  has  proposed.  The  provision  now  made  is 
only  one  bank-note  dollar  for  each  legal-tender  dollar  of  those  can- 
celed, and  none  to  till  the  place  of  those  retained  in  the  Treasury 
uncanceled;  whereas,  from  October,  1865,  to  January,  1868,  the 
additions  to  bank  currency  were  $123,000,000. 

Moreover,  previous  to  October,  L865,  the  new  bank-note  i- 
had  been  very  rapid,  for  in  January,  1865,  there  were  only  - 
750,000  of  bank  notes  outstanding,  showing  an  enlargement  of  the 

8812 


22 

volume  of  the  bank  notes  afloat  of  $327,500,000  in  the  three  years. 

An-1  vet  in  January,  1868,  the  sentiment  of  the  people  had  changed 

eo  absolutely  through  the  canceling  of  STO.omi.i.oO  i  of  legal-tender 

it  th  •  cry  went  up  to  Congress  from  all  over  the  country 

hal  contraction,  and  stop  it  Congress  did.     In  January. 

i\v  was  passed  declaring  that  on  and  after  that  date  the 

>rity  given  the  Secretary  to  reduce  the  currency  "by  retiring 

or  ca  -  United  States  notes"  was  suspended. 

That  is  the  history  of  a  very  desirable  but  badly  managed  move- 
ment. It  began  with  the  country  full  of  enthusiasm  for  it,  and 
end<  d  in  the  short  space  of  about  two  years  with  the  people  thor- 
usted  at  currency  reform  and  with  the  effort  for  its 
attainment  begun  so  auspiciously  an  absolute  failure.  What  we 
want  to  guard  against  most  of  all  now  is  a  similar  waste  of  our 
opportunity.  It  is  a  rare  chauce  we  have.  Shall  we  show  our- 
selves capable  of  taking  advantage  of  it'.J 

NOT  A   REPUBLICAN  BILL. 

Second.  It  is  not  a  Republican  measure,  in  that  it  violates  the 
:e  of  making  an  effort  to  secure  international  bimetalism;  in 
that  it  distinctly,  needlessly,  and  offensively  puts  up  a  "gold  re- 
serve '"  to  redeem  existing  silver  dollars,  thus  practically  demone- 
tizing them. 

Third.  It  is  not  a  Republican  measure,  in  that  it  proposes  to 
allow  banks  to  circulate  paper  money,  which  is  not  "  guaranteed 
by  the  United  States  Government." 

Fourth.  It  is  not  a  Republican  measure,  in  that  it  proposes  to 
make  purely  bank  notes  a  legal  tender;  and 

Fifth.  It  "is  not  a  Republican  measure,  because  it  proposes  to 
force  on  the  Treasury  of  the  United  States  an  unwieldy,  double- 
headed  treasury  system  after  the  similitude  of  the  Bank  of  Eng- 
land system,  where  it  is  a  failure  in  every  panic. 

BASTARD  BANKING    MEASURES. 

Those  hills  are  bastard  banking  measures.  They  have  no  pride 
of  ancestry,  in  that  they  are  not  justified  by  the  banking  system  of 
any  country  in  the  world,  and  we  could  have  no  pride  in  their 
progeny  which  will  be  panic  and  disaster.  The  bills  are  alien  to 
sound  economic  principles,  and  alien  to  true  banking  principles. 
In  every  one  of  these  particulars  they,  in  essence,  if  not  in  letter, 
violate  the  St.  Louis  platform. 

Another  curious  thing  attracts  our  attention.  Like  the  com- 
mittee of  11  appointed  by  the  honorable  gentleman  from  Ohio  [Mr. 
•SVENOR],  the  Committee  on  Coinage,  Weights,  and  Measures 
had  practically  decided  the  question  before  the  bill  was  sent  to 
them.  Six  out  of  the  ten  Republicans  on  that  committee  had 
given  their  pledge  in  writing,  over  their  own  signatures,  that  they 
would  support  bill  H.  R.  102S9,  and  the  other  four  had  signed  the 
other  petition  to  the  Speaker,  "requesting  consideration"  of  the 
bill,  and  thus  indicated  they  were  favorable  to  it. 

The  third  reason  for  favorably  reporting  the  bill  is  a  very  noble 
one.  and  committees  in  the  House  should  always  be  encouraged  in 
rviag  it,  namely,  to  show  the  House  that  the  ten  Republicans 
on  the  Coinage,  Weights,  and  Measures  Committee  were  suffi- 
ciently broad  minded  and  accommodating  to  agree  on  a  bill  even 
if  they  did  not  understand  it.  and  could  not  intelligently  defend 
aprovisii  a  of  it  on  the  floor.  "What's  a  little  matter  like  the 
I  ution  between  i'rinds,"  or  truth  even? 


23 

Till:  BANKING   LAWS  OP  ENG1   KVTD    LND   GERMANY. 

As  to  tin-  unwisdom  of  trying  to  graft  the  Bank  of  England 
temontothi    I  aited  States  Treasury  instead  of  thatof  France 
or  Germany,  I  wish  to  presenl  the  following  from  the  Chic 
Banker  and  Financial  Journal  of  January,  L899: 

"The  financial  world  has  be  a  much  interested  and  highly  grat- 
iii,  d  at  thr  comparal  ve  \  a  ©with  which  Germanypassed  thr< 
its  recent  money  crisis.    The  facts  as  presented  bear  emphatic 
testimony  to  the  excellence  of  the  German  banking  law. 

••  Under  this  law  the  imperial  bank  is  able  to  issue  notes  to  any 
amount  for  which  there  may  be  a  public  necessity.  In  the  mar- 
velous industrial  activity  which  has  prevailed  in  the  fatherland 
there  is  little  doubt  that*  speculative  enterprise  had  been  c  irried 
altogether  beyond  conservative  lines.  German  banks  had  given 
altogether  too  much  indulgence  to  speculators,  promoters,  and 
Others,  without  approved  securities.  In  this  way  a  very  serious 
condi1i.ni  of  the  money  market  came  about,  and  Germany  became 
indebted  in  very  large  sums  to  both  Paris  and  London.  Had  it 
uo1  been  for  the* elastic  currency  provision  in  the  imperial  banking 
law  a  panic  would  doubtless"  have  ensued.  The  record  to  the 
present  time,  however,  shows  not  a  single  important  failure. 

"  In  London,  no  matter  how  grave  the  situation  nor  how  urgent 
the  public  demand  for  money  may  be.  the  Bank  of  England  can 
not  issue  notes  beyond  the  amount  of  its  authorized  issue  and  the 
gold  it  holds,  unless  by  the  kind  permission  of  the  ministry  to 
break  the  law.  In  Germany  the  imperial  bank  can  issue  notes 
beyond  the  gold  actually  held  and  the  authorized  issue  to  any 
amount  that  may  be  required,  always  provided  that  it  pays  the 
Government  5  per  cent  upon  the  excess  issue.  The  way  in  which 
this  system  has  worked  ever  since  it  has  come  into  existence  is 
worthy  of  the  serious  attention  of  our  most  ardent  currency 
>nners. 

"Before  our  whole  banking  system  is  overhauled,  as  it  seems 
likely  to  be,  the  authors  of  the  different  plans  could  not  do  better 
than  to  study  the  workings  of  the  German  banking  law  in  the 
recent  severe  credit  stringency. 

•■  Last  year  large  sums  of  money  were  loaned  in  Berlin  by  New 
York  and  Chicago  banks  through  the  familiar  operation  of  ster- 
ling investments.  Germany  has  been  meeting  the  situation  in 
part  by  selling  her  American  stocks  in  this  market,  thus  influ- 
encing exchange  prices  sufficiently  to  prevent  a  further  drain." 

BANK  in     ENGLAND. 

Also  extracts  from  the  Bankers'  Magazine  and  Statistical  R 
r,  volume  4").  February,  1891. 

Article  on  "  The  London  Crisis  of  November.  1890."  page  595: 

••  We  know  finally  that  the  legislation  of  184  1  restricts  the  ex- 
pansion of  the  Bank  of  England's  notes,  and  paralyzes  it  at  crit- 
ical t  uues." 

Page  600: 

"On  Tuesday,  November  12, 1890,  the  Bank  of  England's  bn 
was  able  to  rush  to  the  stock  exchange,  where  a  panic  was  coming 
mi.  and  announce  the  speedy  arrival  of  $7,500,000  in  gold  from 
Paris.    In  reality  the  advance  agreed  upon,  as  is  known,  by  the 
Bank  of  France  at  3  per  cent,  and  renewable durii  ral  quar- 

ters on  the  security  of  English  fcr<  asury  bonds,  is  $15, 
l: 


2-1 

Page  GOO: 

'•The  chancellor  of  the  exchequer  offered  to  the  governor  of 
the  bank,  if  the  latter  made  a  formal  request,  to  authorize  him  to 
violate  the  act  of  1844,  and  that  Mr.  Lidderdale  declined  to  have 
recourse  to  such  exceptional  means." 

Page  603: 

"  The  raising  of  the  discount  rate  attracted  gold,  or  on  account 
of  the  profitable  rate  at  which  capital  could- be  used,  or  because 
tin-  bankers  of  the  Continent  wanted  to  strengthen  their  position 
with  their  correspondents." 

And  also  the  following  extracts  from  the  Bankers'  Magazine, 
London,  June  and  July,  1891,  page  79: 

QUAE  \NTEE  FUND  "BOND." 

'•Bank  of  England.  November,  1S90. 

"  In  consideration  of  advances  which  the  Bank  of  England  have 
agreed  to  make  to  Messrs.  Baring  Bros.  &  Co.,  to  enable  them  to 
discharge  at  maturity  their  liabilities  existing  on  the  night  of  the 
15th  of  "November,  1890,  or  arising  out  of  business  initiated  on  or 
prior  to  the  loth  of  November,  1890, 

'•  We,  the  undersigned,  hereby  agree,  each  individual,  firm,  or 
company  for  himself  or  themselves  alone,  and  to  the  amount  only 
set  opposite  to  his  or  their  names  respectively,  to  malce  good  to 
the  Bank  of  England  any  loss  which  may  appear  whenever  the 
Bank  of  England  shall  determine  that  the  final  liquidation  of  the 
liabilities  of  Messrs.  Baring  Bros.  &  Co.  has  been  completed,  so 
far  as  in  the  opinion  of  the  governors  is  practicable. 

"All  the  guarantors  shall  contribute  ratably,  and  no  one  indi- 
vidual, firm,  or  company  shall  be  called  on  for  his  or  their  contri- 
bution without  the  like  call  being  made  on  the  others. 

"The  maximum  period  over  which  the  liquidation  may  extend 
is  three  years,  commencing  the  15th  of  November,  1890." 

PANIC  OF  1893. 

Mr.  Speaker,  our  panic  of  1893  lasted  only  sixty-three  days.  On 
June  16, 1893,  money  was  worth  9.3  per  cent;  June  29,  discounts  73-J- 
per  cent;  average  week  ending  June  30  it  was  27.9  per  cent;  Octo- 
ber 20,  1893,  it  was  worth  If  per  cent. 

By  referring  to  Table  A  and  Table  B  it  will  be  seen  that  the 
Imperial  Bank  of  Germany  in  the  industrial  crisis  of  1898  increased 
its  currency  in  circulation  by  $48,000,000,  while  the  Bank  of  Eng- 
land decreased  its  currency  in  the  Baring  Brothers  crisis  in  1890 
by  $5,000,000.    No  panic  in  Germany.    A  fearful  panic  in  England. 

The  Bank  of  England  was  compelled  in  that  crisis  to  borrow 
$7,500,000  in  gold  from  the  Bank  of  France,  with  the  option  of  as 
much  more.  Not  only  this,  but  the  Bank  of  England  was  practi- 
cally forced  to  (because  it  could  not  issue  currency)  assume  $100,- 
000,000  of  the  Baring  Brothers'  obligations  in  ord6r  to  alleviate 
the  financial  distress  in  England,  while  the  Imperial  German  Bank 
only  had  to  increase  its  issue  of  currency,  as  I  have  said,  of  about 
$51 1,000,000  of  notes  to  relieve  the  German  situation.  Furthermore, 
it  will  be  seen  in  the  above  quotations  that  the  English  bank  act 
would  surely  have  been  "suspended  "  in  order  that  the  bank  might 
even  up  to  $100,000,000  of  additional  circulating  notes  if 
.necessary  had  this  gold  not  been  borrowed  from  the  Bank  of 
I  'ranee,  or  had  not  the  bank  assumed  the  $100,000,000  of  the  debts 
■  Baring  Brothers  instead.  Is  the  Republican  party  of  this  coun- 
try ready  to  adopt  a  bank  system  that  would  tend  to  compel  the 


2o 


Treasury  of  the  United  States,  in  conjunction  with  the  banks,  to 
any  such  action? 

Ta  111.12  A.— Analysis  of  a  part  of  the  returns  of  the  Imperial  Bank  of  Germany, 
[London  Economist  and  New  York  Financial  Chronicle.] 


Discount  rate 
on  commuted 

year. 

<  Join  and 
bullion. 

Gold. 

Silver. 

Circula- 
tion. 

paper. 

Berlin. 

New 
York. 

1898. 

Per  ct. 

Per  ct. 

.Tnn.  1") 

$206,  r 

♦$154,838,648 

►$51,61 

$300,039,191 

5 

3* 

Feb.  15  .... 

225, 3E 

169,036,651 

5,554 

257,082,596 

3i 

4 

Mar.  l") 

as,  169 

L75,  153,852 

58,384,617 

248,473,757 

3 

5 

Apr.  1")  — 

210, 5i 

157,91 

13,364 

295,381,957 

51 

May  15 

156,02 

52,0 

1 

6* 

L5 

213,155,068 

159,116,301 

53  038,767 

255,895,170 

8* 

16.... 

196,771 

147,582,696 

49,194,232 

55,118 

4 

An.;.  15 

90,593 

158,367,945 

52,  1 

267,730,229 

3} 

15 

2  19,055,107 

156,7) 

52,263,777 

258,805,337 

4* 

176,683,149 

132,51 

44,512,362 

314,774,953 

5 

L5  .... 

177,461,789 

IS?,  096, 342 

44,365,447 

288,573,717 

5* 

1'  c.  15 

i'j-\  577,13s 

144,432,Soi 

48, 144,  284 

271,789,158 

6 

34 

1899. 

Jan.  15 

180,754,568 

142,315,926 

47,438,642 

304,355,777 

6 

3J 

*Gold  ami  silver  is  not  divided  by  the  statistical  bureau,  but  averages 
about  one-quarter  to  one- third  silver  to  two-thirds  to  three-quarters  gold. 


Table  B.— Analysis  of  Bank  of  England  returns. 
[Bankers'  Magazine,  London,  1891.] 


Year. 


1890. 

Jnly.2 

August  li 

tember  3 

iber  1 

November  •"> 

November  12 

December  3 

1891. 

nary  7 

February  4 

March  4 

April  1 

i  6 

June  :s 

,  1 


Gold  in 
issue  de- 
partment. 


$97,741,708 
95,241,663 

105,347,875 
93  074,757 
90,401,218 
87,877,213 

115,042,785 


113,645,598 
118,524,331 
107,577,851 
104,116, 11" 

■  e,  i '.to 

5, 129 


Notes  in 
circulation. 


$121,611,088 
124,806,332 
121,270,698 
66,427 
I  M  630,826 
119,144,938 
120,071,325 


I'M.  or,.",,  200 
118,397,954 
117,832,759 
121,1 

121,787,618 

131,764,697 

J11.340 


Percent- 
afro  of 
reserve  to 

liabilities. 


a? 

37 
45 
33 
35 
SI 
45 


40 
46 

3ti 
33 
33 
44 
43 


Rate 
of  dis- 
count. 


Per  cent. 
4 
5 
4 
5 
5 
« 
5 


4 

31 
34 
3* 

4 
4 
24 


NO  MIDDLE  GROUND. 

Mr.  Speaker,  we  must  not  forget  that  there  is  no  middle  ground. 
Either  a  great  National  bank,  with  6,000 to 20,000  bran<  hes.  which 
i.-  the  mosl  scientific,  ova  quasi  union  of  all  the  6,000  to  20,1  00  inde 
pendent  hanks,  only  touching  rich  other  through  clearing  hoi 

w  hich  is  more  democratic  and  a  thousandfold  safer.     The  Walker 
bill  is  the  latter. 

3812 


26 

RATES  OF   INTEREST. 

Mr.  Speaker.  I  wish  now  to  call  the  attention  of  the  House  to 
Tables  K.  showing  the  disparity  in  the  rates  of  discount  between  dif- 
ferent cities  in  this  country,  to  say  nothing-  of  the  farming  districts 
and  the  cities  in  the  same  States.  It  will  be  seen  that  while  the 
average  rate  of  discount  on  good  commercial  paper  in  New  York 
during  the  year  1897  averaged  4  per  cent,  it  averaged  8  per  cent 
at  St.  Joseph.  Mo..  10  percent  in  Portland.  Oreg.,  and  12  per  cent 
in  Denver,  Colo.  This  unnecessary  and  cruel  hardship  it  is  pro- 
posed to  perpetuate  for  four  years,  eight  years,  ten  years,  or  for- 
ever, in  the  bills  H.  R.  11411  and  H.  R.  10289  which  the  Republican 
party  is  expected  to  make  "party  measures."' 

Tun  r  B.     Average  rate  of  discount  in  forty-three  cities  of  the  United  States, 
..  and  for  the  five  years,  not  including  days  of  panic, 
as  reported  weekly  in  "BradstreePs." 


Place. 

Borrowers   of    the    highest    credit- 
Lower  rates— Per  cent  on  commer- 
cial paper. 

1893-7. 

1893. 

1894. 

1895. 

1896. 

1897. 

3.83 
4.41 
4.56 
4.60 
4.64 
4.98 
5  til 

5.27 

6.73 

6. 1 1 

6.09 

6.15 

6.12 

5. 88 

6. 49 

5.94 

7.01 

6.65 

6 

6 

6.11 

7.  18 

7.11 

6.  98 

7.15 

i 

7 

7.61 
8 
7.03 

5 .  :>; 

6.90 
6.84 

7.13 

.    : 

7.96 

7.01 

7.78 

8 

8 

8 

8 

8 

8 

8 

8.07 

8.78 

10 

10 

10 

2.76 
2.90 
4.62 
3.43 
3. 46 
3.81 
4.60 
5. 24 
5.28 

4.  98 
5.38 

ti 

6 

6 

5.  98 
5.80 
6. 1 1 
6.69 

6.  88 
6.23 
7.09 
7.05 
tl.  to 
6. 98 
6.  26 
7 

7 

7 

7.01 

7 

8 

8 

8 

8 

8 

8 

8 

8 

8 

7.57 

9.36 
10 
10 

3.19 

3. 55 

4 

4. 06 

4.31 

4.65 

4.83 

5.33 

5. 96 

4.76 

5.  25 
6 

6 

6 

5. 38 

5.94 

6 

6 

6 

6 

6 

5.96 

6.  78 
6.50 
6.53 
7 

7 
7 
7 

i 

8 

S 

8 

8 

8 

8 

8 

8 

8 

8.42 

9 
10 
10 

4.92 

5.40 

4 

5.72 

5.57 

6.(17 

5. 61 

0.54 

6 

6.50 

6.23 

6 

6 

6 

6.25 

6. 

<•>.  28 

6 

6 

6.  84 

6.34 

6 

6.  94 
7.21 
8 

7 
7 
7 
7.38 

7.  53 
8 

8 

8 

8 

8 

8 

8 

8 

8 

8. 92 

9 
10 
10 

2.99 

3.  46 

4.(19 

Hartford         

3.  70 

3.69 

Providence - - 

4.24 

4  12 

5.  74 
5. 83 
5.85 
5.90 
6 

6 

6.00 
6.10 
6. 21 
6.23 
6.36 
6. 37 
6  41 

6  i.i) 

6.  67 
6.  82 
6.90 
6. 91 
6.96 

7  02 
7.05 
7. 25 
7.31 
7.95 
7. 98 
7.99 
8 

8 
8 
8 
8 

8.01 
8.34 
9. 27 
9.96 
10 

5. 08 

Pittsburg    .     - 

6 

New  <  >r  leans 

6 

6 

Portland.  Me 

6 

Richmond.  Va  - 

6 

Buffalo                   

5.93 

Memphis  .         - - 

5. 42 

San  Francisco 

Milwauke           - 

6 

Indianapolis        -- 

6 

6 

Del  roit                 

6 

SI   Paul                      

5. 38 

Nashville 

5.75 

Louisville - 

G  96 

6. 25 

Kansas  City 

6.84 

St.  Joseph 

7 

7 

1  .<  i     Angeles 

7 

Duluth       

6. 90 

Galveston 

8 

Mobile 

8 

(  l:r.(|ia 

7.90 

Einnah    

7.96 

Atlanta 

8 

Birmingham 

8 

ton - 

8 

Porl  land,  ( )  r<  -lt            

8 

Sail  I  iake  i             

8 

LittleRock    .  

8 

Dallas    ...                         

8 

Tacoma 

9 

i  tie 

9.84 

Denver 

10 

3!:  12 


27 


Table  B,  >unt  in  forty-three  cities,  etc.— Continued. 


Place. 

i  ;■  growers  of  avei             idil     Higher 
Per    o  iii    <>ii    commercial 
paper. 

1894. 

1893. 

1  97. 

i;  6  i 

6  63 

7.01 
(j  go 

6.  96 

7.19 
6.  (6 
7.01 
7.74 
G 

7.78 
8.03 
8.48 

7 

8 

7 

7.19 

8 

8 

: .  1 7 

8 

8 

7.84 

7.84 

9. 28 

9 

8 

8 

8.80 
8.03 
9.46 
8 

10 

10 

1 1 .  69 

12 

10.38 

3.77 
3.63 

1  33 
.  "i 
4.83 
5,  1 1 
6.25 
6 

6  34 
7.01 
ii 
7 

7.65 
7.96 
6.78 
6. 98 
8 
7 

7.23 
7.09 
8 
7.23 

:  82 

8 
8 
8 
9 

: .  88 

8 

8 

10 

111 

8 
10 

8 
10 
10 

9.84 

9. 15 
11 
12 
12 

4.84 

I  :.M 

4.61 
5.  56 

5  :,l 

6  01 

6 

0 

7 
!  86 

7 

8 

7 

0.09 

ii  32 

8 

7 

7.84 

7.80 

8 

8 

9 

8 

8 

8 
10 
10 

8 
10 

8 
10 
10 
10 
10 

11 

13 
13 

6  17 
1  50 

6  i; 

6  92 

7 

0 

6 

7.94 

8 

6 

7.  L5 

8 

7 

6.84 

7.69 

8 

i;  96 

7. '.iii 

9.57 

8 

8 

9 

8.26 

8 

8 
10 
10 

8 
10 

8 
10 
10 
10 
10 
11 
13 
12 

4  (0 

5.16 

6.01 
5.7S 
5. 81 

6 

6  I 
7.66 

5 .  85 

!  03 
8 

7 

6.  or 

7.  11 
7.70 
7.05 
7.  Ml 
8.38 
7.96 
7.96 

8. 23 

8 

8 

9.00 

9.75 

8 

9.86 

8 
10 
10 

9. 09 

11.13 

11  96 
11.07 

4 

4.64 

■.liia 

I  27 
8.88 

Provide]    •■      

Oinc  :m:.ti  

I  96 
5.17 

I                     

6  07 

7 

.  m  s 

0.88 

St.  Louis 

7 



6 

■                    !    \'a    

6 

Buffalo 

7.92 

iptus 

7.42 

ukee 

7 

i         'land 

8 

7 

:it 

0 

ul       

7.38 

Nashville 

0.53 

7 

Minneapolis 

7.40 

8.48 

8 

Charleston 

8 

Duluth 

9 
8 

i                         Q 

8 

8 



1 A 

9.80 

Savannah -. 

9.96 

8 

Birmingham 

9.88 

'tin  

8 

land, ( >reg 

10 

i  lity 

10 

i                  k 

8.73 

Dallas    

10 

.ua 

11 

11.84 



12 

Interest  ral  es  are  mucli  higher  in  strictly  country  districts  of  the  States  in 
Which  tlic  above  cities  are  la  ated. 

FOUR  SOUND   PRINCIPLES. 

By  the  adoption  into  law  of  the  four  principles  I  have  insisted 
•'.  fur  the  last  ten  aid  propose  to  insist  upon  with  all 

the  power  I  have  while  I  have  any  influence  in  public  affairs,  in 
■or  out— namely,  to  relieve  the  Treasury  from  maintaining 
parity,  to  compel  the  banks  to  maintain  parity  se  to  rob  the 

people  of  the  capital  th  v  wish  to  use  in  banking  by  compelling 
them  to  buy  bonds  to  engage  in  banking,  and  to  restore  to  the 
people  their  natural  rights  by  allowing  them  rir  own 

as  money  in  the  bills  of  the  banks  they  own — will  equalize 
:       -•  of  discount  all  over  the  country.     The  people  were  I 
of  this  right  in  the  uent  of  the  10  per  cent  tax  on  S 

bank  currency  in  ISO i  for  a  patriotic  reason.     It  must  □ 


28 


i     •  red  in  a  sound  nati  »nal  system.    Then  rates  of  discount 
Id  Barely  be  very  nearly  the  same  all  over  this  country,  as  they 
bsolntely  the  same  now  in  Scotland  and  in  France,  and  very 
rly  the  same  all  over  Germany  and  in  Canada. 

THE    BOND    1SSIK   01 

Again,  Mr.  Speaker,  it  will  be  seen  by  Table  D.  what  I  said  in 
I  louse  while  we  were  discussing  the  revenue  measure  of  1898 
is  true.  More  than  $9,000,000  were  absolutely  wasted  in  the  sale 
of  the  3  per  cent  ten-twenties  of  1898.  I  was  treated  with  scant 
courtesv  when  I  said  in  the  House,  when  that  measure  was  being 
1.  that  it  would  lose  the  country  from  $30,000,000  to 
$30,1  that  upon  the  price  our  bonds  sold  for  during  1889  the 

saving  on  that  $200,000,000  sold,  as  the  table  and  footnotes  show, 
would  he  s:J0. i  00,000.  Upon  the  basis  of  what  our  bonds  sold  for 
in  the  three  y<  ars,  L887,  1888,  and  L889  the  loss  was  X'^, 000,000,  and 
covering  the' whole  eight  years  ending  1892  at  the  price  our  bonds 
sold  for  the  loss  was  s  l  s. 000.000,  and  at  the  price  the  identical  3  per 
cent  ten-twenties  of  is  18  iu  January.  1899,  the  loss  was  s!0, 000,000, 
as  I  have  said.  But  what  I  then  said  has  already  come  true. 
The  Secretary  of  the  Treasury  was  forced  by  the  unwisdom  of 
Congress  to  sell  those  bonds  on  the  market  at  their  face  value 
and  without  the  slightest  justification.  This  is  not  a  question  of 
"foresight"  and  "hindsight."  Every  man  of  the  slightest  finan- 
cial experience  knew  it  then  as  surely  as  he  knows  it  now. 

TABLE  D.— Ec  c<  ipts,  etc.,  in  Unit  '•  per  cent  ,'<<-  i  >  bonds  of  1S0S. 


Awards 
in— 

Amount. 

Market 
price. 

Market 
valu 

Treasury 
moneys 

national 
banks. 

Free  moneys 

in  Tri 

including 

deposits  in 

national 

banks. 

Free  mon- 
eys in 
Treasury 

less,  that 
deposited 
in  banks. 

1898. 

June 

July 

Aug 

Si   1-1 

Oct  

Nov 

Dec 

1899. 
Jan 

126,514,837 
.  M 

57,623, 104 

27,956,135 

(4,897 

2,470,284 

959,203 

219,893 

*  L04 

Mill 
105 
105.4 
105.6 
105.5 
107 

108 

827,575,430 
77,864,844 
6  I  504,259 

i 
9,192  371 
2,606,149 
1,026,40! 

269,884 

',■:-  339,359 
;    795,631 
58,266,108 
65,968,461 
80,888,712 
95,014,909 
94,041   001 

94,860,916 

h$195  754,815 
205,657,51  1 
254,844.215 
294.487,085 
307,557,501 
300,238.275 
r^  790 

294,764,695 

$16;  575,456 
166,861,940 
178,107 
228,578,618 
226,668,792 
205,223  306 
197, 735, 789 

lon,^.::.:;!) 

Total 

199,318,450 

208,505,100 

*  Estimated.  t  On  the  1st  day  of  the  month. 

Appreciation  of  bonds,  $9,156,64  f. 

On  January  31,  1899,  United  Slates  10  20  year  3  per  cent  bonds  of  1898  to 
yield  2.543  per  cent  must  sell  for  108,  to  yi  sld  3  to  per  cent  must  sell  Cor  109, 

Id  :>.:,?.i  per  cent:  must  sell  for  111$,  to  yield  2  per  cent  must  sell  for  110  to 
yield  2J  per  cent  must  sell  for  1074;. 

There  is  no  justification  in  selling  bonds  for  a  less  price  than 
they  are  worth  on  the  market  under  the  plea  of  a  "popular  loan." 
There  can  be  no  such  thing  as  a  popular  loan  in  this  country,  as 
it  is  understood  in  France.  Our  people  do  not  keep  their  savings 
on  their  persons,  in  their  houses,  or  bury  them  in  pots  in  their 
gardens.  It  is  believed  that  not  more  than  .j  per  cent  of  the 
$200,000,000  loan  of  1898  is  owned  by  persons  who  have  property 
to  the  value  of  810,000  or  less.     There  is  very  nearly  §50,000,000  of 


20 

that  loan  already  in  the  Treasury,  either  as  security  for  Treasury 
money  deposited  in  bauks  or  for  circulating  notes  taken  out  by 
banks.  I  inserl  the  following  slip  from  tho  Worcester,  Mass., 
Evening  Gazette,  of  August  8,  LSI 

"now  Till-:  WAB    BONDS  wi;r  RIBED  FOR. 

"The  Citizens' National  Bank  has  received  most  of  its  subscrip- 
tion of  $66,000  in  Government  war  bonds,  and  has  the  assurance 
that  the  small  balance  will  arrive  in  a  short  time.  The  bonds  are 
all  of  the  denomination  of  $500,  and  were  subscribed  for  by  1  :.' 
friends  Of  the  bank,  each  in  his  own  name  and  under  his  own  a  1- 
dress.  The  bank  sent  the  money  for  tho  lot  by  a  single  New 
"^  ork  check,  which  was  made  possible  from  the  fact  that  the  in- 
stitution was  one  of  those  designated  by  the  Government  for 
i     .  i  \  Lng  subscriptions. 

••  The  subscribers  signed  an  agreement  to  hand  over  to  the  bank 
the  bonds  as  soon  as  received,  ami  already  the  great  part  of 
the  pi  ecious  papers  are  deposited  in  the  vaults  of  the  bank.  The 
Quinsigamond  National  Bank  expects  to  receive  $10,000  in  $500 
bo]  cured  in  much  the  same  way  as  were  those  of  the  Citi- 

zens' bank.  Word  of  the  acceptance  of  the  bid  has  already  ar- 
rived. As  the  profit  on  these  bonds  is  already  $5,  the  investment 
is  a  good  one.  Other  banks  subscribed  for  the  bonds  in  larger 
amounts,  and  consequently  do  not  expect  to  be  successful  in  get- 
ting them,  as  the  issue  will  be  consumed  in  bonds  of  the  small 
denominations." 

THE  PEOPLE  BOBBED. 

Mr.  Speaker,  what  is  true  of  that  loan  which  that  bank  took  is 
true  of  nearly  every  dollar  of  that  loan.  It  is  not  held  in  banks, 
but  by  bank  officers  and  their  friends.  It  is  too  gilt-edged  at  the 
price  they  paid  for  it  to  be  put  in  public  institutions  for  the 
interest  of  stockholders.  It  is  held  by  private  persons,  by  the 
bankers  of  this  country,  or  by  the  banks  themselves  to  an  amount 
of  at  least  $190,000,000  of  the  total  $-200,000,000,  and  yet  tho  law 
still  stands.  If  the  Secretary  of  the  Treasury  is  obliged  to  sell 
100  more  bonds  he  will  be  obliged  to  waste  from  .S15.000.000 
b  >  $3<  1,000,000  more.  The  Republicans  who  are  responsible  for  such 
foolish  Legislation  have  the  task  before  them  of  making  the  people 
believe  from  the  stump  that  that  law  is  the  very  acme  of  sound 
Republican  financial  wisdom.  They  are  also  to  bring  this  wisdom 
to  the  indorsement  of  the  bill  II.  R.  10289  and  of  the  doings  of  the 
Indiana), olis  Monetary  Commission  lobby. 

1  yield  live  minutes  to  the  gentleman  from  Indiana  [Mr.  JOHN- 
BONJ. 

Mr.  JOHNSON  of  Indiana.  I  desire  to  occupy  the  time  only  for 
the  purpose  of  asking  the  gentleman  a  question.  He  was  talking 
a  bit  ago  of  a  committee  composed  of  the  members  of  this  I  louse  to 
take  into  consideration  the  currency  question  and  devise  a  system 
of  hanking  and  currency  to  be  presented  for  the  legislation  of  this 
House.    Now,  do  you  expect  that  the  next  C  s,on  theeveof 

the  nexl  general  election,  is  going  I  banking  and  cur- 

rency Legislation  at  all?    For  my  part  i  do  not. 

POLITICAL   DYNAMITE  IN  CURRENCY   LEGISLATION. 

Mr.  WALKER  of  Massachusetts.    Neither  do  1.     [t  would 
suit  in  the  certain  defeat  of  the  Republican  party  if  it  did. 

more  d  .  to  the  square  inch  in  anything  conni  cted  with 

the  United  Stat*  s  Treai  ury  and  our  banking  and  currency  Bystem 


30 

than  in  any  other  subject  that  can  be  presented  for  legislation. 
The  people  who  would  lie  benefited  by  the  legislation  to  which 
the  gentleman  refers  are  now  fooling  with  unlimited  coinage  of 
silver,  and  if  you  attack  this  question  at  all  just  before  instead  of 
just  after  election  it  is  certain  to  swamp  the  party.  The  Speaker 
"of  the  House  knows  that  that  has  been  my  opinion  from  the  first. 
I  was  interested  in  having  the  committee  educated  now  up  to  de- 
ciding on  what  should  be  done  at  the  proper  time— on  what  shall 
be  dune  in  the  future,  when  we  are  in  a  position  where  it  will  be 
possible  for  us  to  do  anything.     December,  1896,  is  not  December, 

Mr.  Speaker.  I  believe  I  have  but  five  minutes  remaining. 

Mr.  COX.  Will  the  chairman  of  the  Committee  on  Banking 
and  Currency  yield  now  for  one  question? 

Mr.  WALKER  of  Massachusetts.  I  will  not  yield  under  any 
circumstances  to  the  gentleman  from  Tennessee  [Mr.  Cox],  for  I 
have  not  the  time. 

The  SPEAKER.     The  gentleman  from  Massachusetts  declines 

to  yield. 

THE  CHAIRMAN'S  DIFFICULTIES  ILLUSTRATED  ON  THE   SPOT. 

Mr.  WALKER  of  Massachusetts.  Mr.  Speaker,  I  want  to  call 
the  attention  of  the  House  to  the  difficulties  the  chairman  of  the 
Committee  on  Banking  and  Currency  has  labored  under  in  the 
committee,  as  illustrated  by  what  is  taking  place  here  and  now. 

With  reference  to  the  treatment  of  the  President's  recommen- 
dations, the  gentleman  from  Connecticut  [Mr.  Hill],  and  the 
gentleman  from  Indiana  [Mr.  Johnson]  .  on  the  floor  of  this  House, 
labored  indefatigably  to  defeat  one  of  the  most  specific  pledges 
given  by  the  party  at  St.  Louis,  doing  all  they  could  against  them 
here  and  in  committee.  The  pledge  had  been  given  that  the  Re- 
publicans would  do  all  that  could  be  done  to  secure  international 
bimetallism,  and  they  did  everything  they  could  against  making 
the  onlv  effort  possible  in  providing  a  commission  to  visit  Europe, 
absolutely  oblivious  of  the  pledges  of  their  party. 

BANKING  REFORM  NEVER  PROMISED  BY  PLATFORM  OR  PRESIDENT. 

The  partv  platform  or  the  President  never  promised  to  reform 
the  banking  and  currency  and  the  Treasury  system  of  this  country, 
and  are  not  responsible  for  it  in  any  degree  whatever.  They  have 
promised  to  continue  to  maintain  the  parity.  It  is  true  that  this 
great  reform  in  our  Treasury— banking  and  currency— must  come, 
in  order  to  maintain  parity  without  having  it  cost  us  from  fifty 
million  to  seventy  million  dollars  a  year.  But  the  people  of  this 
country  are  not  vet  ready  for  this  banking  and  currency  reform. 
They  had  rather  still  further  sacrifice  the  fifty  to  seventy  millions 
of  dollars  a  year  until  they  get  good  and  ready.  It  is  not  our  busi- 
ness, as  Congressmen,  to  do  it  unsupported  by  the  people.  It  is 
the  business  of  the  people  to  first  demand  it,  then  we  can  safely 
act,  and  not  till  then. 

Mr.  JOHNSON  of  Indiana.  Does  not  your  bill  contemplate  a 
banking  and  currency  reform? 

Mr.  WALKER  of  Massachusetts.  I  donot  yield;  and.  further, 
I  want  the  Sergeant-at-Arms  to  appear,  if  necessary,  to  protect 

my  time.  ,     .   ,  t 

The  SPEAKER.     The  gentleman  declines  to  be  interrupted. 
Mr.  WALKER  of  Massachusetts.     A  man  has  a  right  some- 
times to  speak  of  himself.    I  think  it  is  recorded  somewhere  that 
3813 


31 

a  man  in  speaking  of  himself  s&id  that  he  "had  fonght  a  good 
fighl  and  bad  finished  his  coarse."  In  my  office  of  chairman  of 
the  Committee  on  Banking  and  Currency  I  have,  in  my  speeches 

and  writings,  exhausted  t  Ins  question  as  Ear  as  it  ran  be  exhausted, 
npon  the  issues  already  raised,  and  finished  my  course.  Bui  my 
reports  and  speei  hes,  to  the  committee  mostly,  and  on  the  floor  of 
the  Eouse,  are  ignored  by  nearly  every  man,  so  far  as  1  know,  in 
looking  for  his  p  srsonal  glory.     [Laughter.  | 

No  man  has  patiently  investigated  any  point  and  come  tome 
With  proof  that  I  was  in  error,  as  they  were  in  duty  bound  to  do 
to  a  man  working  day  and  night  in  pursuit  of  the  truth  on  tins 
great  reform, as  1  was  compelled  to  do  in  my  office.  I  again  chal- 
lenge any  man  in  this  House  and  in  the  country  to  successfully 
Eoint  out  any  error  or  successfully  contradict  a  single  position  I 
taken.  The  facts  I  have  given  are  facts  taken  from  official 
public  documents  or  compiled  in  the  public  offices  for  me  and  to 
which  you  can  refer  to  see  whether  I  am  correct  or  not.  Table  Q 
shows  how  few  bonds  were  taken  in  the  South  and  West. 

UNIFORM   COl   RTESY  of  THE   HOUSE. 

Finally,  Mr.  Speaker,  I  want  to  thank  this  House  for  its  uniform 
courtesy  to  me  during  my  ten  years'  service.  I  am  not  one  who 
prophesies  smooth  things.  I  go  for  the  truth  direct,  with  but  little 
regard  for  who  stands  between  me  and  the  truth  as  I  see  it.  And 
yet  never  on  this  floor  excepting  on  three  occasions  in  my  ten  years' 
service  has  any  gentleman  objected  when  I  asked  unanimous  con- 
sent—the gentleman  from  Massachusetts,  my  colleague  [Mr.  Bab- 
ki.tt],  the  gentleman  from  New  York  [Mr.  BENNETT  J,  and  the 
gentleman  from  Connecticut  [Mr.  Hii.i,|. 

Mr.  BARTLETT.     Nobody  on  this  side. 

Mr.  WALKER  of  Massachusetts.  Nobody  on  that  side.  In 
fact  the  opposition  party  are  entirely  ready  to  listen  to  an  inde- 
pendent man.  whether  he  be  Republican  or  Democrat  [applause]  — 
entirely  ready. 

Thanking  the  House  for  its  uniform  and  abundant  courtesy,  I 
yield  the  floor.     [Applause.] 
■3612 


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UNITED  STATES  TREASURY  AND  BANKING  AND 
CURRENCY  PROBLEMS. 


WE  HAVE  THE  WORST  FINANCIAL  SYSTEM  IN  THE  WORLD. 

DOUBT,   FEAR,  AND    PANIC    INHERENT    IN    IT. 

PANIC  OF  1893  SURE  TO  BE  REPEATED. 


SPEECH 


OF 


Hon. JOSEPH  H.WALKER, 

OK     MASSACHUSETTS, 


IN    THE 


HOUSE  OF  REPRESENTATIVES, 


TUESDAY,  FEBRUARY  14,  1899. 


WASHINGTON. 
I899. 


SPEECH 


OF 


HON.    JOSEPH    H.    WALKER. 


The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.  12008)  making  appropriations  for 
sundry  civil  expenses  of  the  Government  for  the  fiscal  year  ending  June  30, 
1900,  and  for  other  purposes- 
Mr.  WALKER  of  Massachusetts  said: 

Mr.  Chairman:  In  the  time  allotted  to  me  I  shall  speak  on  the 
currency  problems  of  the  United  States. 

Before  proceeding  with  the  discussion  we  must  find  some  com- 
mon ground  to  stand  upon,  else  our  facts  will  be  ignored  and  our 
conclusions  impotent. 

All  the  data  upon  which  I  have  formed  what  I  shall  say.  and 
every  fact  and  argument,  are  given  more  fully  in  part  2  of  House 
Report  1575,  Fifty-fifth  Congress,  second  session. 

THE  GOLD  STANDARD. 

I  do  not  second  the  cry  for  a  new  declaration  for  the  gold 
standard,  and  thus  admit  that  we  were  not  put  on  a  gold  stand- 
ard by  Jackson,  Benton,  and  a  Democratic  Congress  in  1S84,  and 
have  not  had  a  gold  standard  ever  since.  Neither  would  I  attempt 
to  abolish  any  of  our  money,  desirable  as  it  may  be  to  do  so. 

That  would  be  attempting  to  take  a  second  step  before  the  first. 
And  this  notwithstanding  we  have  four  hundred  millions  more 
of  gold  and  four  hundred  millions  more  of  silver  than  economic 
conditions  justify  our  having. 

STATESMANSHIP. 

Furthermore,  I  am  of  the  opinion  that  we  do  not  compliment 
our  statesmanship  by  unnecessarily  offending  a  single  prejudice 
or  false  opinion. 

SEVENTY  MILLION  DOLLARS  WASTED. 

I  am  for  making  as  few  changes  as  possible,  in  order  to  make 
rational  fear  of  maintaining  parity  impossible,  to  give  the  South 
and  West  banking  facilities,  and  to  save  the  §70,000,000  per  annum 
now  needlessly  wasted  in  maintaining  parity  by  the  Treasury. 

BANKING  AND  CURRENCY  CONDITIONS. 

"The  currency  problems  of  the  United  States  "are  clearly  re- 
vealed in  a  plain  statement  of  our  banking  and  currency  condi- 
tions, as  compared  with  those  of  Fiance,  Germany,  England,  and 
every  other  highly  civilized  nation. 

While  the  countries  named  have  systems  varying  to  some  de- 
gree, all  may  be  said  to  be  normal.  That  of  France  is  built  d<  >\vn 
from  the  top,  having  one  bank,  with  branches  extending  into  every 
community,  like  her  government. 

Our  people  insist  that  our  banking  and  currency  system  shall 
be  built  up  of  units  at  the  bottom,  each  bank  independent  of  all 
others,  as  are  the  men  in  a  town  who  together  make  the  body 
politic. 

3742  38 


30 

FREE  BANKING. 

Our  free  banking  law,  allowing  any  five  reputable  citizens  any- 
where to  form  a  bank  by  getting  together  the  required  capital, 
will  never  be  abandoned,  nor  need  it  be. 

A  system  individual  as  to  each  bank,  but  united  into  one  solid 
structure  for  all  purposes  where  union  is  necessary,  will  give  us 
a  banking  and  currency  system  as  much  superior  to  the  banking 
and  currency  system  of  France  as  our  institutions  are  on  a  more 
solid  foundation. 

BANKING  COMPLETE  IN  ITSELF. 

All  human  experience  proves — 

First.  That  it  is  not  possible  to  have  a  sound  banking  and  cur- 
rency system  in  this  country,  as  there  never  has  been  in  any  other, 
while  it  is  not  complete  in  itself.  It  must  be  wholly  separated 
from  any  organic  connection  with  the  Government  Treasury,  as 
is  that  of  France,  Germany,  England,  and  every  other  first-class 
country,  the  United  States  alone  excepted. 

UNION  OF  BANKS. 

Second.  That  it  is  not  possible  to  maintain  the  parity  between 
paper  money  and  gold  where  a  multitude  of  independent  banks 
exist,  excepting  by  restricting  the  legal-tender  coin  to  gold  alone, 
as  in  England. 

MAINTAINING  PARITY. 

Third.  That  where  there  are  two  or  more  kinds  of  legal-tender 
money,  each  differing  widely  from  the  others  in  intrinsic  value, 
as  paper,  silver,  and  gold,  it  is  impossible  to  maintain  parity  with- 
out making  a  union  of  all  banks  sufficiently  solid  to  make  each 
one  and  all  equally  responsible  for  maintaining  the  parity  of  all 
moneys  in  circulation  and  practically  making  all  banks  act  together 
as  one  whole  for  maintaining  parity,  as  in  France,  Germany,  etc. 

A  MISERABLE  FAILURE. 

Nearly  every  government  has  tried  the  banking  and  currency 
experiment  the  United  States  is  now  trying,  and  everyone  trying 
it  has  miserably  failed. 

There  are  no  two  opinions  on  our  utter  failure  since  1893,  es- 
pecially in  view  of  the  fact  that  we  are  wasting  $70,000,000  annu- 
ally in  trying  the  experiment.  Up  to  1893  it  was  the  fashion  to 
pronounce  the  financial  and  banking  system  of  the  United  States 
the  best  the  sun  ever  shone  upon. 

IMMEDIATE  REFORM   DEMANDED. 

To-day  there  is  scarcely  a  man  in  the  country  who  has  any  in- 
terest in  questions  pertaining  to  economics,  if  there  is  even  one 
who  is  not  demanding  its  immediate  reform. 

WORST  FINANCIAL  SYSTEM  IN  THE  WORLD. 

Hon.  James  H.  Eckels,  ex-Comptroller  of  the  Currency,  in 
answer  to  a  question  by  the  chairman,  said  to  the  Banking  and 
Currency  Committee:  "Yes;  the  United  States  has  the  worst 
financial  and  currency  system  of  any  leading  nation." 

Upon  the  above  being  read  to  Hon.  Charles  S.  Fairchild,  ex- 
Secretary  of  the  Treasury,  and  his  opinion  asked,  he  replied:  "  I 
think  it  is  the  worst,"  and  Secretary  Gage  concurred  in  Mr.  Fair- 
child's  statement. 

NO  TRUE  BANK   CURRENCY. 

In  fact,  all  writers  on  finance,  banking,  and  currency  are  a 
unit  in  condemning  our  system,  those  of  Europe  declaring  that 
there  is  not  a  dollar  of  "  true  bank  currency  "or  really  sound  cur- 
rency in  the  United  States. 


37 

Abri«'f  examination  will  justify  as  thoroughly  intelligent  the 
unfavorable  opinion  of  it  generally  held. 

On  January  1,  1890.  we  had  of— 

United  States  legal-tender  notes $846,681,016 

Silver  coin  (when  all  bullion  is  coined) 60  1,000,000 

( 'nrrency  certificates 20,  640,  000 

National-bank  notes 24:5,817,869 

Total  moneys  required  to  be  kept  at  a  parity 
withhold ----  1,211,138,885 


Gold  in  the  Treasury 282,174,906 

Outstanding  gold  certificai es :3>.  201.939 

Net  gold  in  the  Treasury 246,973,027 

Other  free  moneys 44, 957, 520 

Total  free  moneys  in  the  Treasury 291,930,547 

The  stock  of  gold  in  national  banks  is 266, 464. 000 

Other  banks,  trust  companies,  etc.,  about  the  same.  266. 000, 000 

Gold  certificates - 35,201.939 

Visible  gold  in  banks,  etc. 567,665,939 

Free  gold  in  United  States  Treasury 246. 973, 027 

Total  visible  gold 814.638,966 

Gold  hoarded  and  in  circulation  as  currency 135, 061, 034 

Total  gold  coin  and  bullion 949, 700. 000 

Total  gold  in  France 810, 600, 000 

Total  silver  in  France. 8119,800.000 

Total  currency  in  France  . 741 .  000. 000 

Total  currency  and  silver 1 .  100. 800, 000 

Gold  in  Bank  of  France 375, 400, 000 

Total  gold  in  Germany 668,500,000 

Total  silver  in  Germany 8212, 800, 000 

Currency  issued  by  Imperial  Bank..     317,000.000 
Currency  issued  by  other  banks 42, 220, 000 

Total  currency  and  silver 572. 020. 000 

Gold  in  Imperial  Bank $142, 000, 000 

Gold  in  other  banks 13, 930, 000 

Gold  held  by  banks. 155. 930, 000 

Total  gold  in  the  United  Kingdom 438. 000, 000 

Gold  in  the  Bank  of  England 192,680, 

Gold  in  the  Bank  of  Scotland 27,500,000 

Gold  in  the  Bank  of  Ireland 14,880,000 

Total 2  15,060,000 

3742 


21 


38 

REDEMPTION  GOLD. 

It  appears  that  France  has  gold  in  bank  available  for  the  cur- 
rent redemption  of  each  $100  of  her  total  of  silver  and  paper  a 
little  over  $32:  Germany,  $27;  the  United  States  Treasury,  $19. 
Redemption  gold  in  the  United  States  Treasury,  only  $7. 

The  Secretary  of  the  Treasury  reports  only  $100,000,000  as  "re- 
demption gold,"  as  he  may  well  do,  as  the  balance  can  be  only 
ordinary  money,  in  the  Treasury,  otherwise  the  Secretary  would 
have  only  $45, 000,000  free  moneys. 

This  makes  the  percentage  of  gold  to  redeem  $100  of  silver  and 
paper  money  only  $7.70,  instead  of  $19.70. 

All  the  visible  gold  in  this  country  would  be  ' '  redemption  gold  " 
actually  in  the  banks  did  the  law  require  our  banks  to  maintain 
parity.  It  would  be  $6:130  to  each  $100  of  paper  and  silver  money; 
double,  instead  of  less  than  one-quarter,  that  of  France. 

It  would  be  nearly  twice  and  a  half  that  of  Germany,  instead 
of  a  little  more  than  one-quarter  as  now.  It  would  give  us  eight 
and  one-fifth  times  the  redemption  gold  we  now  have.  What 
words  can  be  too  hot  in  condemnation  of  such  a  condition  of  our 
finances? 

But  even  this  $100,000,000  of  redemption  gold  in  the  Treasury, 
little  as  it  seems  as  compared  with  the  $800,000,000  we  have  in 
the  country,  would  be  ample  for  gold  redemption  were  it  legally 
liable  for  redemption  purposes  in  the  banking  system  of  the 
country,  instead  of  outside  of  it  in  the  United  States  Treasury. 

CAPITAL  AND  CASH   RESERVE. 

National  and  State  banks  of  loan  and  discount  have  $560,000,000 
of  cash  reserves  and  $1,350,000,000  of  actual  capital,  a  total  of 
$1,910,000,000  to  use  in  protecting  $100,000,000  gold  to  maintain 
parity.  They  now  have  $532,000,000  of  gold,  more  than  twice  as 
much  as  the  total  gold  in  the  United  States  Treasury  and  more 
than  five  times  as  much  gold  as  the  Treasury  has  of  gold  to  use 
in  redemption,  and  yet  they  are  under  no  legal  obligation  to  re- 
deem in  gold,  a  dollar  of  paper  money. 

PROTECTING  GOLD. 

The  banks  have  six  and  one-half  times  more  funds  that  they  can 
use  in  protecting  gold  than  the  total  moneys  in  the  United  States 
Treasury. 

They  also  have  absolute  power  to  protect  every  dollar  of  gold 
they  have  by  raising  the  rates  of  discount,  as  is  always  done  with 
perfect  success  in  England,  France,  Germany,  etc.,  while  the 
United  States  Treasury  is  absolutely  powerless  to  protect  a  dollar 
of  its  gold  in  good  times  or  bad,  from  Israelite  or  Christian  living 
in  any  part  of  the  world. 

Why  do  not  currency  reformers  recommend  the  imposition  of  a 
straight  legal  obligation  upon  banks  to  redeem  in  gold? 

The  visible  gold  daily  used  is  less  than  $10,000,000.  Every  em- 
pirical practice  conceivable  is  recommended  for  a  cure  by  the 
very  men  who  know  the  only  possible  cure.  This  indubitable 
statement  reveals  what  is  really  the  most  discouraging  "  banking 
and  currency  problem  in  the  United  States." 

ENGLAND  AND   FOREIGN  COMMERCE. 

Only  foreign  commerce  tests  the  " measure-of -value  coin"  in 
the  banking  system  of  any  country  that  has  a  normal  system. 
England,  as  the  clearing  house  of  the  world,  needs  four  times 
the  gold  that  is  needed  in  this  country,  and  she  has  less  than 
half  as  much. 


39 

HANKS  8HOULD  HKHKEM  IN  GOLD. 

But  of  the  $438,000,000  of  gold  in  Great  Britain,  her  visible 
gold,  viz,  $385,000,000,  is  in  her  banking  system,  where  it  can  be 
protected  by  her  immense  banking  capital  and  cash  reserves,  by 
raising  discount  rates. 

Her  banks  are  required  by  law  to  bear  the  burden  of  redeeming 
in  gold. 

Our  banks  are  absolved  from  this  duty,  which  is  fundamental 
to  sound  banking. 

Germany  has  only  §150,000,000  of  gold  in  her  banking  system, 
which  is  protected  by  all  the  cash  reserves  held  by  banks  plus  their 
capital,  and  is  also  effectively  protected  by  the  power  to  increase 
rates  on  discounts. 

So  with  France.  To  raise  the  rate  of  discount  on  loans  is  a  quick 
and  sure  protection  of  gold  in  banks.  Then  why  hesitate  as  to  a 
remedy'.-' 

The  absolute  confidence,  not  only  of  every  man  in  England  but 
of  the  world,  in  the  certainty  of  parity  being  maintained  with 
gold  of  every  dollar  of  paper  money,  and  all  banking  funds  as 
well,  is  not  because  of  the  amount  of  gold  in  England,  for  it  is 
relatively  very  small,  but  because  every  dollar  of  her  visible  gold 
is  in  her  banking  system. 

England  has  not  one  dollar  in  visible  gold  where  we  actually 
have  three  and  a  half;  and.  relatively  to  the  demands  on  her  gold, 
not  one  dollar  where  we  have  fourteen. 

So  with  France,  and  so  with  Germany,  and  wholly  because  the 
visible  gold  is  in  banks,  and  banks  are  compelled  by  law  to  main- 
tain parity  by  redeeming  paper  money  in  gold. 

BANKS  ONLY   CAN    MEASURE  VALUES  IN  COIN. 

There  is  no  device  known  to  man  for  legitimately  using  a 
"  measure-of-value  coin  "  excepting  by  banks,  and  that  in  exchang- 
ing evidences  of  debt,  which  again  are  titles  to  products;  and 
there  is  no  way  of  protecting  gold  in  that  function  excepting  in 
raising  or  lowering  the  rate  of  discount,  a  thing  impossible  to  a 
public  treasury. 

EXPORTING  AND  IMPORTING   GOLD. 

There  are  hundreds  of  millions  of  dollars  in  the  $2,500,000,000 
of  deposits  in  our  banks  waiting  to  be  invested  in  bonds  or  stocks 
when  they  shall  have  been  depreciated  a  little  and  to  a  price  that 
will  pay  the  buyer  a  larger  income  than  normal. 

Millions  of  these  funds  are  controlled  in  Europe,  as  there  are 
millions  in  European  banks  controlled  in  this  country, that  await 
investment  in  stocks  and  bonds  when  rates  of  discount  are  raised, 
so  as  to  slightly  depress  the  price  of  bonds  to  a  point  that  will 
pay  a  little  more  than  a  normal  income. 

These  stocks  and  bonds  are  always  shipped  from  one  country  to 
another — gold  only  to  a  very  slight  amount.  In  1891  the  balance 
of  exports  over  imports  of  gold,  taking  into  account  our  gold  pro- 
duction, only  depleted  our  gold  $700^000.  In  1892  it  depleted  it 
$25,000,00Q.  In  the  commercial  agony  of  1893  we  actually  gained 
$29,000,000  of  gold.  In  1894  our  net  loss  was  $41,000,000.  Taking 
the  bad  years  of  1893  and  1894  together,  we  lost  only  $12,000,OUO  of 
gold. 

Balance  of  trade  for  or  against  a  country  is  not  a  controlling 
influence  in  the  movement  of  gold. 

No  one  wants  gold  excepting  in  times  when  he  thinks  he  may 
not  be  able  to  get  it. 

The  certainty  of  getting  gold  "on  demand,''  plus  a  higher  rate 
37 1! 


40 

of  interest,  will  take  gold  to  anyplace,  regardless  of  whether  that 
place  has  a  sound  or  unsound  currency  and  of  every  other  cir- 
cumstance or  condition. 

We  increased  our  accumulations  of  gold  by  over  $300,000,000 
during  suspension  of  specie  payments. 

A  doubt  of  getting  gold  on  demand  or  a  lower  rate  of  interest 
will  send  gold  away  from  anyplace  regardless  of  every  other  con- 
dition, as  is  proved  by  all  experience. 

DOUBT.    FEAR.   PANIC. 

The  seeds  of  doubt,  fear,  and  financial  panic  inhere  in  and  are 
inseparable  from  any  system  of  government  treasury  issuing  or 
redeeming  paper  money. 

They  may  lie  dormant,  as  they  did  in  1892,  and  as  they  do  now, 
but  we  may  be  sure  they  are  germinating. 

The  fury  of  each  succeeding  financial  storm  will  exceed  the  pre- 
vious one,  even  as  that  of  1893  did  all  that  went  before  it.  This 
is  necessarily  so. 

The  manufacturing,  trading,  transporting,  and  banking  inter- 
ests of  the  country  are  increasing  with  tremendous  rapidity,  and 
their  delicacy  and  intricacy  are  increasing  in  a  far  greater  ratio 
than  their  volume. 

OUR  INDUSTRIAL  SYSTEM  IN   PERIL. 

Every  man  that  is  so  situated  as  to  be  compelled  to  study  the 
situation  can  not  help  shuddering  as  he  thinks  of  the  peril  to  the 
whole  industrial  system  of  this  country,  involving  billions  on  bil- 
lions of  dollars:  far  past  human  comprehension. 

Their  lifeblood  is  the  two  and  a  half  billions  of  dollars  of  bank 
deposits,  and  these  billions  are  made  serviceable  by  $1,000,000,000 
of  currency,  and  that  currency  depends  for  its  value  on  being  in- 
stantty  and  certainly  redeemable,  and  there  is  now  only  one  hun- 
dred millions  of  gold  legally  liable  for  this  redemption. 

Even  that  gold  is  not  in  normal  contact  with  our  currency  in 
our  banking  system,  but  stored  away  in  the  United  States  Treas- 
ury. It  is  as  much  outside  the  financial  and  banking  system  of 
the  country  as  though  it  were  held  by  any  one  of  a  thousand  indi- 
viduals, sole  or  corporate. 

Remember  the  United  States  is  only  a  huge  business  individual 
enterprise,  with  no  more  banking  resources  than  any  other  person. 

PAPER  MONEY  A  TITLE  TO  PRODUCTS. 

The  whole  theory  and  practice  of  sound  paper  money  is  that  the 
person  receiving  it  from  the  bank  gives  the  bank  a  title  to  products 
in  his  possession,  in  his  time  note,  to  an  amount  equal  to  the 
amount  of  paper  money  he  receives. 

These  products  pay,  cancel,  and  destroy  the  paper  money  he 
received  for  his  time  note  when  the  note  is  paid. 

The  banks  in  this  country  have  in  their  possession  $2  worth  of 
property  over  and  above  all  they  owe  to  depositors  with  which  to 
redeem  each  dollar  of  silver  and  paper  money  in  the  country,  pro- 
vided they  were  responsible  for  such  redemption.  The  United 
States  Treasury  has  only  23  cents  and  4  mills,  supplemented  by  the 
power  of  taxation. 

TREASURY   RESPONSIBLE  FOR  ALL  PAPER   MONEY. 

It  will  not  do  to  replv  that  the  (xovernment  is  responsible  only 
for  the  $346,000,000  of  legal-tender  notes. 

When  questioned  before  our  committee,  ex-Secretary  of  the 
Treasury  Carlisle,  ex-Secretary  Fairchild,  Secretary  Gage,  and 
Comptroller  Eckles  declared  that,  while  the  United  States  was  re- 

37W 


41 

sponsible  for  keeping  the  parity  between  any  two  kinds  of  money 
in  general  circulation,  it  was  inevitably  responsible,  in  the  last 
analysis,  for  keeping  every  dollar  of  existing  money  at  a  parity  by 
gold  redemption. 

DUTY  TO   MAINTAIN   PARITY  INDIVISIBLE. 

Again,  the  duty  of  maintaining  parity  is  not  susceptible  of  divi- 
sion.   Two  parties  can  not  by  any  possibility  be  equally  responsible. 

NORMAL  REDEMPTION   ONLY   POSSIBLE  TO   BANKS 

The  very  existence  of  sound  paper  money  is  only  possible  in  a 
currency  that  has  poteutial  and  actual  daily  gold  redemption,  and 
daily  redemption  is  only  possible  in  a  "true  bank  circulating 
note,"  viz,  a  circulating  note  issued  against  their  assets,  and  for 
which  the  bank  receives  the  personal-property  note  (products)  to 
a  like  amount  with  which  to  redeem  the  notes,  such  as  are  issued 
in  England.  France,  Germany,  and  in  every  country  excepting 
the  United  States. 

A  government  is  a  consumer  and  destroyer  of  every  dollar's 
worth  of  products  it  receives  for  the  currency  it  issues,  and  in  the 
nature  of  the  case  can  legitimately  have  nothing  with  which  to 
redeem  the  currency  it  pays  out. 

A  bank  is  a  preserver  and  increaser  of  every  dollar's  worth  of 
products  it  receives  in  the  time  note  of  its  customer  for  the  cur- 
rency it  issues,  and  in  the  nature  of  the  case  must  have  in  its 
possession  more  dollars'  worth  of  products  with  which  to  redeem 
every  dollar  of  its  currency  than  it  had  when  it  paid  it  out  for 
the  personal  time  notes  of  its  customers. 

Currency  issued  by  a  bank  is  a  certificate  of  actual  deposit  of 
products  in  the  bank  and  their  preservation. 

Currency  issued  by  a  government  is  a  certificate  of  the  con- 
sumption of  products. 

UNSCIENTIFIC  AND  WASTEFUL. 

Not  only  is  our  financial  system  the  most  unscientific  and  inse- 
cure of  any  ever  devised  that  maintained  its  paper  money  at  a 
parity  with  gold,  but  it  is  the  most  wasteful. 

OPPRESSIVE  TO  AGRICULTURAL  SECTIONS. 

It  especially  oppresses  those  sections  of  the  country  that  most 
need  the  fostering  care  of  the  Government,  and  as  a  consequence 
they  voted  for  free  silver  in  1896. 

Those  States  are  nearly  SoOO. 000.000  short  in  banking  funds  as 
compared  with  the  per  capita  in  those  same  States  in  I860,  taking 
for  a  basis  the  nine  oldest  States  in  the  group,  while  the  New 
England,  the  Eastern,  and  the  Middle  States  are  overbanked  by 
from  .)  to  20  per  cent.  The  proof  of  this  is  found  in  the  fact  that 
some  of  the  banks  in  the  richer  States  are  obliged  to  buy  bonds  to 
employ  their  funds  in  excess  of  what  they  might  legitimately  buy 
as  a  reserve.  They  now  hold  about  §600,000,000  of  United  States 
and  other  bonds. 

Others  are  forced  into  reducing  their  capital,  into  consolidation 
or  liquidation,  by  the  savings  banks  and  trust  companies  that  own 
their  stock. 

INCUKASI.S   DISCOUNT  RATES. 

In  the  strictly  agricultural  States  discount  rates  on  commercial 
paper  are  from  one-quarter  to  one-third  higher  than  normal,  and 
far  higher  than  in  1*60.  Banks  are  practically  prohibited  in 
agricultural  communities  by  the  national  banking  law,  and  this 
because  it  compels  abnormal  banking. 

Finance  and  banking  are  as  old  as  civilization.  Their  present 
art.' 


42 

form  and  substance  are  as  much  the  result  of  natural  law  as  that 
of  anything  in  animate  or  inanimate  nature. 

BANKING  A  NATURAL  DEVELOPMENT. 

The  banking  and  currency  of  all  nations  follow  the  natural  lines 
of  development,  varying  only  in  minor  details,  excepting  that  of 
the  United  Stat.-.  ( >urs  departs  widely  from  fundamental  prin- 
ciples, and  is  therefore  insecure  and  wasteful,  as  will  appear  if  we 
examine  the  kinds  and  amount  of  our  various  forms  of  money. 

We  have  of  gold  coin  and  bullion $950,000,000 

Silver  coin - - - 600,000.000 

United  States  legal-tender  notes 347,000,000 

Currency  certificates 20,000,000 

Total  money  issued  by  the  Government 1,917,000,000 

National-banknotes 244,000,000 

Total  money  in  the  country. 2,168,000,000 

Of  this  $1,500,000,000  of  coin  every  dollar  our  people  have  proved 
they  need  or  desire  by  actual  use  we  must  have.  Every  dollar 
m<  ire  than  that  is  actual  waste. 

Where  paper  money  is  as  satisfactory  to  the  people,  5  per  cent 
interest  is  lost  on  every  dollar  of  gold  or  silver  needlessly  used. 

WASTEFULNESS  ADMITTED. 

Every  one  admits  that  where  a  thing  costing  $100  is  used  where 
a  thing  costing  nothing  will  do  the  work  as  well,  or  better,  wear 
and  tear  and  interest  is  lost  on  $100.  A  friend  of  mine  used  22 
hi  irses  to  do  the  work  around  his  factories  and  2  miles  to  the  sta- 
tion. He  put  in  an  electric  railway  to  the  station,  and  now  keeps 
only  2  horses. 

For  him  to  still  incur  the  expense  of  the  keeping,  depreciation, 
and  loss  on  the  20  horses  discarded,  because  he  once  needed  them, 
would  be  no  more  uneconomic  and  foolish  than  for  this  country 
to  have  a  single  dollar's  worth  of  coin  more  than  is  necessary  to 
make  our  currency  sound  plus  what  is  demanded  by  our  people 
to  hoard  or  to  use  as  currency,  foolishly  or  wisely. 

AMOUNT  OF  SILVER  AND  GOLD  NEEDED. 

We  have  only  been  able  to  keep  in  actual  circulation,  after 
spending  thousands  of  dollars  to  get  them  into  circulation,  silver 
dollars  to  the  amount  of  §05,000,000,  and  subsidiary  silver,  $70,- 
000,000;  a  total  of  $135,000,000.  Call  our  actual  needs  of  silver 
money  $200,000,000.  We  actually  use  $150,000,000  gold  for  hoard- 
ing and  currency.  One  hundred  million  dollars  redemption  gold 
is  in  the  Treasury,  $250,000,000  only  in  daily  legitimate  use,  thus 
leaving  $700,000,000  gold  absolutely  out  of  reach  of  our  banking 
system  for  a  fundamental  use,  showing  a  chaotic  condition  in  our 
banking  and  currency.  England  successfully  conducted  the  ex- 
changes of  the  world  for  fortyyears  on  less  than  $150,000,000  visible 
_<  ild,  bnt  it  was  in  bank.  The  Bank  of  Englandnow  has  less  than 
$200,000,000  with  which  to  make  the  gold  exchanges  of  the  world. 

I l()W  THE   WASTE  IS  MADE. 

Assuming  we  need  $300,000,000  of  gold  in  the  ' '  bank  cash  reserve 
held  "  in  a  sound  banking  system,  we  can  safely  have  in  addition 
•  000,000  United  States  legal-tender  notes  and  200.000,000  silver 
dollars,  making  up  the  $700,000,000  cash  reserve  that  would  be 
needed  when  the  South  and  the  Northwest  have  the  same  amount 
of  banking  funds  per  capita  they  had  in  1860.  The  exhibit  under 
ft  i.' 


43 

our  present  system  and  under  a  scientific  system  would  be  as 
follows: 

Present  gold  in  the  country (950, 

Need  for  hoarding  and  currency $150,000, 

In  cash  bank  reserves 800,000,000 

450. 000, 000 

Unnecessary  gold 000,000,000 

We  have  silver $600,000,hm> 

Can  use  legitimately  only 400, 000, 000 

Unnecessary  silver 200,000,000 

Legal-tender  notes . $346, 000, 000 

Can  use  legitimately  only 200, 000, 000 

Unnecessary  legal  tender 146,000.  "no 

Currency  certificates 30,000,000 

National-bank  currency 244, 000,  ( 100 

Total  amount  of  the  money  that  should  be 
bank  paper  money 1,110,000.000 

Not  one  dollar  of  this  is  now  earning  a  cent  to  the  banks  or  sav- 
ing one  dollar  of  interest  to  the  people  by  lowering  discount  rates. 

This  is  an  anomaly  never  before  seen  in  any  country  where 
parity  was  maintained  between  paper  money,  silver  money,  and 
gold.  In  Germany,  in  France,  and  in  every  other  country,  this 
81,110,000,000  would  be  earning  full  interest  by  keeping  the  rate 
of  interest  on  loans  down  by  the  proportion  that  this  $1,110,000,000 
bears  to  the  whole  volume  of  discounts  in  the  country,  a  total  sum 
at  5  per  cent  on  it,  or  $55,500,000. 

LOSS  OF  INTEREST  ON  TREASURY  BALANCES. 

But  we  are  also  carrying  in  the  public  Treasury  $291,000,000, 
while  England,  France,  and  Germany  average  about  $30,000,000, 
leaving  $360,000,000  more  than  is  necessary,  provided  we  had  a 
sound  financial  system. 

We  must  continue  to  carry  this  vast  amount,  as  we  have  done 
for  twenty  years,  in  order  to  give  the  people  confidence  that  the 
Treasury  is  able  to  maintain  parity. 

This  again  is  worth  5  per  cent  in  the  pockets  of  the  people  be- 
fore it  was  taken  from  them  in  taxes,  or  $13,000,000. 

LOSS  IN  TREASURY  ADMINISTRATION. 

In  addition  to  this  it  costs  to  administer  our  Treasury  system, 
because  of  our  violation  of  the  principle  of  normal  banking,  about 
§1,500,000  more  than  it  costs  any  other  nation.  These  three  items, 
aggregating  $70,000,000,  are  utterly  wasted. 

That  these  things  are  incontestibly  true,  is  shown  by  the  testimony 
of  Secretary  Gage.  ex-Secretary  Fairchild.  given  on  incidental 
matters,  and  the  other  experts  who  came  before  our  committee. 

AMOUNT  OF  PAPEK   MONEY  NEEDED. 

Assuming  that  there  is  a  legitimate  demand  for  the  amount  of 
money  we  have  and  that  this  $1,200,000,000  that  requires  gold  re- 
dempion  was  issued  by  our  banks,  as  the  paper  money  of  France 
and  Germany  is  issued,  our  bank  loanable  funds  would  be  in- 
creased by  this  $1,200,000,000. 

HIGHER  DISCOUNT  RATES  COMPELLED. 

Interest  rates  now  compelled  in  order  to  pay  6  per  cent  divi- 
dends on  bank  capital  would  then  be  reduced  just  as  much  as  it 

o712 


44 

would  be  by  adding  §1,200,000,000  to  the  deposits,  or  as  this  sum 
is  to  about  $1,000,000,000  capital  and  deposits  and  currency,  less 
the  reserve,  three-tenths  of  1  per  cent,  or  from  5  per  cent  to  3£  per 
cent. 

REDUCTION  IN  INTEREST  TO   AGRICULTURAL  STATES. 

This  reduction  of  present  rates  of  discount  would  not  come  to 
the  over  banked  cities  of  the  middle  North  and  Northeastern  States, 
but  wholly  to  the  agricultural  sections  of  the  country,  where  only 
currency  can  be  used,  and  where  the  having  of  banks  is  impossi- 
ble, without  the  privilege  of  issuing  "  true  bank  currency." 

It  would  come  especially  in  those  States  which  voted  for  soft 
money  in  1896  and  which  are  now  short  of  banking  funds  by 
nearly  half  a  billion  dollars. 

As  it  is  to-day,  not  a  dollar  is  added  to  the  loanable  funds  of  our 
banks  by  this  $1,200,000,000  of  redeemable  money. 

CURRENCY  AND  DEPOSITS  IDENTICAL. 

Deposits  entered  on  the  pass  book  of  a  borrower  and  currency 
issued  by  a  bank  to  a  borrower  are  identical  in  substance. 

In  the  case  of  deposits  the  check  that  draws  out  the  deposit  is 
made  by  the  depositor. 

In  the  case  of  currency,  which  in  substance  is  identical  with  the 
check,  it  is  made  by  the  bank  and  given  to  the  borrower  at  the 
time  the  loan  to  him  was  made. 

The  borrower  uses  currency  at  any  time,  as  the  check  can  be 
used  at  any  time.  The  check  can  only  be  passed  from  man  to  man 
by  each  writing  his  name  on  the  back  of  it,  but,  whoever  holds  it, 
it  is  his  check  on  his  funds  in  the  bank. 

Currency  passes  from  man  to  man  without  indorsement,  but  it 
remains  a  bank  check  of  the  man  who  holds  it  against  his  funds  in 
the  bank. 

USE  OF  UNITED  STATES  BONDS  OPPRESSIVE. 

There  is  no  more  sense  in  requiring  a  bank  to  buy  United  States 
bonds  to  the  amount  of  the  obligations  it  assumes  in  accepting  the 
proceeds  of  a  man's  time  note  that  it  discounts  and  gives  him  its 
own  currency  notes  for.  than  there  would  be  in  compelling  the 
bank  to  buy  United  States  bonds  to  the  amount  of  obligations  it 
assumes  in  accepting  deposits  and  allowing  the  man  himself  to 
make  his  own  currency  to  draw  it  out,  viz,  his  own  check. 

When  a  bank  discounts  a  time  note  for  a  customer  for  si. 000  and 
the  proceeds  are  left  on  deposit,  its  funds  are  not  depleted  by  one 
cent  so  long  as  the  deposit  remains.  When  a  bank  discounts  a 
time  note  for  a  customer  for  $1,000  and  tne  proceeds  are  given  the 
customer  in  '"true  bank  currency,''  such  as  banks  issue  in  every 
country  in  the  world  excepting  this,  its  funds  are  not  depleted  one 
cent  so  long  as  the  currency  is  not  returned  to  the  bank  for 
redemption. 

When  the  bank  is  obliged  to  surrender  as  many  dollars  in  buy- 
ing bonds  as  it  gets  of  currency,  its  capital  is  depleted  by  every 
dollar  of  currency  it  has  in  the  bank. 

CITY  BANKS  FAVORED— COUNTRY  BANKS  OPPRESSED. 

Because  city  banks  are  allowed  to  do  business  by  accepting  the 
only  form  of  deposits  their  customers  can  use.  viz.  bank  deposits, 
and  country  banks  are  not  allowed  to  do  business  by  using  the 
only  form  of  deposits  their  customers  can  use,  viz.  currency  in  the 
hand  of  the  borrower,  interest  is  necessarily  nearly  twice  as  high 
in  the  country  as  in  the  central  reserve  ci  ties. 

If  the  $650, 000, 000  deposits  now  in  the  banks  in  the  central  re- 
3742 


to 

serve  cities  were  taken  off  their  books  by  theissneto  th<  ir  OUStonv 
ere  of  $650,000,000  of  currency,  and  their  customers  were  com- 
pelled to  use  this  currency  instead  of  their  own  checks  and  dra 
it  would  greatly  inconvenience  their  customers,  l>ut   it  would 
increase  the  risk  of  the  banks  by  the  Bmallesl  traction. 

UNITED  STATKS,    H(\  KMANV 

This  fact  is  recognized  in  every  European  country,  and  wis  acted 
on  in  this  country  up  to  1860. 

The  national  banks  in  the  central  reserve  cities  have  $4.88  In  de- 
posits and  12  cents  in  currency  to  each  dollar  of  capital.  Total, 
§4.45.  The  Imperial  Bank  of  Germany  has  $4.59  in  deposits  and 
§10.83  currency  to  each  dollar  of  capital.  Total.  $15.44. 
Bank  of  France  has  $3.64  in  deposits  and  $21.05  currency  to  each 
dollar  of  capital.  Total.  $28.69.  Can  anyone  be  found  so  rash  as 
to  assert  that  the  Imperial  Bank  of  Germany  is  made  any  les 
cure  than  our  banks  for  the  reason  that  its  deposit  liability  in  the 
form  of  currency  issued  is  90  times  that  of  our  banks,  or  that 
the  Bank  of  France  is  any  less  secure  because  it  has  a  deposit 
liability  in  the  form  of  currency  issued  175  times  as  great  as  have 
our  banks  for  currency  issued? 

Banks  in  cities  can  not  issue  currency.  Their  customers  can 
not  use  it.  City  business  requires  checks,  drafts,  etc..  identical 
in  substance  with  bank  currency.  The  customers  of  banks  in 
strictly  country  districts  can  not  use  checks,  drafts,  etc.  Their 
business  requires  currency. 

For  this  reason  the  national  banking  law  practically  discourages 
banks  in  all  strictly  agricultural  districts  and  States. 

CITY  AND  COUNTRY  RATES  COMPARED. 

Banks  in  strictly  agricultural  States  to-day  would  have  to  charge 
7.34  per  cent  under  precisely  the  same  conditions  as  to  loans  that 
New  York  banks  can  loan  for  2.98  per  cent,  each  to  pay  G  per  cent 
dividend  on  stock. 

Under  the  European  system,  or  under  the  best  banking  system 
the  world  ever  saw.  viz,  the  old  New  England  Suffolk  system. 
rates  of  discount  on  loans  in  the  country  districts  to-day  would  be 
about  4.55  per  cent. 

As  I  have  before  said,  four-fifths  of  the  $70,000,000  taxation, 
direct  and  indirect,  falls  on  the  people  of  the  States  voting  for  soft 
money  in  1896,  not  in  banks  charging  higher  rates  of  interest,  as 
the  few  that  exist  surely  do,  but  in  the  oppressions  arising  from 
their  lack  of  banks,  being  to-day  about  $500,01)0,000  short  of  bank- 
ing funds  as  compared  with  1860. 

If  this  does  not  justify  men  in  voting  for  free  coinage,  in  their 
desperation,  it  certainly  furnishes  them  some  excuse. 

CHANGE  IN  SENTIMENT. 

Up  to  the  date  of  my  address  before  the  department  of  com- 
merce and  finance  of  the  World's  Fair  at  Chicago,  on  June  21, 
1893.  in  exposition  of  the  anomalies  and  hardships  of  our  national 
banking  law,  I  had  always  heard  our  banking  and  currency  sys- 
tem extolled  as  the  best  the  world  had  ever  seen.  In  six  years  all 
this  is  reversed.  To  day  there  is  no  one  well  informed  in  the 
matter  who  does  not  think  it  the  most  unscientific  and  wasteful. 

Having  the  facts  that  show  its  shortcomings,  we  are  brought  to 
the  question  of  what  is  the  least  change  in  the  banking  law  that 
is  necessary  to  remedy  existing  evils. 

■67iU 


46 

SOURCE  OF   EXISTING    EVILS. 

(1)  The  fundamental  evil  is  in  requiring  the  United  States 
Treasury  to  redeem  any  part  of  the  money  used,  in  order  to  main- 
tain parity. 

(2)  The  prohibition  to  banks  of  the  issuing  of  "true  bank  cur- 
rency," as  banks  do  in  every  other  country,  by  requiring  them  to 
buy  bonds  to  the  amount  of  the  currency  they  issue,  thus  absorb- 
ing the  capital  invested  in  bonds. 

HKMEDY. 

Combine  our  banks  through  clearing  houses,  and  make  them 
legally  responsible  for  the  maintenance  of  parity,  and  allow  each 
bank  to  issue  currency  to  the  amount  of  its  capital,  without  rob- 
bing it  of  its  paid-in  capital  in  the  purchase  of  bonds,  and  our 
banking  and  currency  system  will  be  transformed  from  the  worst 
in  the  world  to  the  best  in  the  world. 

REMEDIES  PROPOSED  THAT  WOULD  NOT  CURE. 

There  have  been  considered  in  the  Committee  on  Banking  and 
Currency  five  general  bills: 

(1)  The  Carlisle  bill  of  December  11,  1894,  H.  R.  8149,  Fifty- 
third  Congress. 

In  the  hearings  on  this  bill  the  "Baltimore  plan  "  of  October 
11,  1894,  was  considered. 

(2)  Gage  bill  of  December  16,  1897,  H.  R.  5181,  Fifty-fifth  Con- 
gress. 

(3)  Indianapolis  commission  bill  of  January  6, 1898,  H.  R.  5855, 
Fifty-fifth  Congress. 

(4)  McCleary  bill  of  April  5,  1898,  H.  R.  9725,  Fifty-fifth  Con- 
gress. 

(5)  Hill-Fowler  bill  of  May  11,  1898,  H.  R.  10289,  Fifty-fifth 
Congress. 

TRUE  REMEDY. 

In  addition  to  these,  there  is  the  Walker  bill,  introduced  in  1889, 
which  has  been  a  constant  study  since,  and  modified  from  time  to 
time  to  May  13,  1898,  and  is  now  H.  R.  10333. 

I  have  held  this  bill  back  from  formal  consideration  in  order 
that  all  other  bills  might  be  first  considered. 

The  result  is  that  it  never  has  been  formally  considered  by  the 
committee.     I  will  venture  first  to  say  a  few  words  of  that  bill. 

First.  It  relieves  the  United  States  Treasury  from  all  responsi- 
bility for  the  current  redemption  of  any  kind  of  money  by  putting 
it  on  the  only  organizations  known  to  man  that  can  legitimately 
maintain  parity,  viz,  banks. 

Second.  It  takes  the  United  States  bonds  out  of  the  banking 
system  and  allows  banks  to  issue  "true  bank  currency." 

All  currency  is  issued  to  banks  by  the  Comptroller  and  guaran- 
teed by  the  Government  in  case  of  insolvency. 

A  tax  of  one-fifth  of  1  per  cent  is  put  upon  the  currency  in  actual 
circulation,  which  it  is  estimated  will  yield  four  times  the  amount 
necessary  to  the  guaranty. 

Third.  It  saves  sixty  of  the  seventy  millions  now  lost  in  direct 
and  indirect  taxation. 

These  three  things,  and  only  these,  does  it  propose  to  do,  and  it 
surely  does  them. 

It  retains  every  real  advantage  of  our  national  system. 

It  makes  national  the  old  New  England  Suffolk  bank  system. 

BAD  STATE  BANKS. 

The  memory  of  the  wild-cat  banks  of  Michigan,  Illinois,  and  the 
Northwest,  with  a  few  swindling  concerns  in  Mississippi  and  the 

3742 


17 

extreme  South  west  before  IMS.  together  with  the  bond-secured  sys- 
tem of  New  York,  has  closed  the  minds  of  out  people  to  the  i 
lenciesof  the  old  State  banks  of  New  England,  the  Atlantic  81 
and  Louisiana. 

They  were  as  sound  and  as  well  managed  as  our  national  banks, 
and  with  less  insolvency. 

Of  course  we  can  not  go  back  to  State  banks  now,  but  we  should 
incorporate  into  our  national  system  all  the  good  there  w.i 
them. 

SCCCES8  A   DUTY. 

Again,  we  must  not  forget  that  success  in  legislation  is  a  duty 
in  trying  to  secure  reforms  in  our  finances,  as  it  is  in  everything 

else. 

THINGS  THAT  CAN   HOI    BH   DONE. 

We  must  therefore  ascertain  what  the  people  will  not  allow  to 
be  done,  as  well  as  what  ought  to  be  done,  in  order  to  know  on 
what  lines  we  can  proceed  in  reform. 

First.  They  will  not  allow  the  United  States  1>"_,'h1 -tender  i 
to  be  retired  either  by  selling  bonds,  using  the  surplus  revenues, 
or  by  changing  them  into  gold  certificates;  and  Congressmen  will 
not  face  defeat  in  voting  for  such  propositions. 

Second.  They  will  not  allow  a  law  to  be  passed  that  in  term- 
demonetizes  the  silver  dollar  by  setting  aside  a  gold  fund  to  re- 
deem them,  and  thus  invite  their  presentation  to  the  Treasury  to 
be  redeemed  in  gold. 

Third.  The  people  will  never  consent  to  allow  banks  to  put  in 
circulation  any  currency  not  gotten  of  the  Comptroller  of  the 
Currency  and  the  payment  of  which  is  not  guaranteed  by  the 
United  States;  and  this  because  of  the  memory  of  the  few  bad 
State  banks,  which  has  tainted  the  memory  of  all  State  banks, 
good  and  bad  alike. 

Every  bill  formally  considered  by  the  committee  runs  counter 
to  all  three  of  these  settled  convictions  of  the  people. 

REMEDIES  PROPOSED  AGGRAVATE  ADMITTED   EVII  - 

As  every  remedy  proposed  in  each  one  of  the  five  bills  formally 
considered  by  the  committee  is  incorporated  in  the  Hill-Fowler 
bill,  and  as  that  bill  was  adopted  by  the  Indianapolis  convention 
as  the  final  result  of  all  financial  wisdom,  we  need  consider  that 
only. 

DIVIDING  TREASURY  FUNDS. 

Its  propositions  are: 

First.  To  separate  the  money  in  the  Treasury  into  two  parts, 
the  one  part  to  be  used  for  general  purposes  and  the  other  part 
to  be  an  "  issue  and  redemption  fund"  set  apart  to  redeem  legal- 
tender  notes  and  silver  dollars,  to  be  administered  under  rigid 
rules  embedded  in  statute  law. 

The  proposed  division  is  purely  a  matter  of  administration.  It 
can  be  so  done  to-day  without  legislation. 

Nothing  could  be  worse  than  to  bind  the  hands  of  the  Secretary 
of  the  Treasury  in  the  use  of  any  part  of  his  funds  by  rigid  law. 

Every  business  man  knows  that  the  financial  manager  ol  a  cor- 
poration, in  an  exigency,  must  have  every  dollar  of  its  funds  at  his 
command. 

With  part  tied  up  out  of  reach,  failure  may  lie  inevitable,  when 
the  crisis  might  be  tided  over  could  the  last  dollar  of  its  r< 
be  used.     The  same  is  true  of  the  United  States  Treasury. 

How.  then,  can  two  "tills"  in  which  to  keep  the  Government 
money  instead  of  one  avert  or  allay  panio? 

3742 


4S 

There  would  be  two  funds  to  warch  and  to  alarm  the  people  in- 
ne.     The  division  of  Treasury  funds,  in  essence,  can  be 
nothing  more  than  a  question  of  bookkeeping  as  far  as  liabilky  is 
concerned. 

This  ignis  fatuus  has  its  origin  in  the  two  departments  of  the 
Rink  of  England. 

That  division  of  funds  has  never  been  approved  by  a  single  finan- 
cial institution  anywhere  by  its  example  being  followed. 

It  has  confessedly  intensified  every  panic  in  England,  and  has 
been  suspended  in  emergencies. 

It  is  condemned  by  every  European  financial  writer  and  by 
jt  of  those  in  England.     It  is  treated  as  a  matter  of  bookkeep- 
by  nearly  all  writers  on  finance. 

DESTROYING      LEGAL-TENDER     NOT-  MAKING     BANK     NOTES     LEGAL 

TENDER. 

Second.  It  is  proposed  to  destroy  the  present  United  States  legal- 
tender  note  and  allow  the  banks  to  issue  the  same  amount  in  a 
purely  bank  note,  and  make  these  bank  notes  legal  tender. 

Is  it  conceivable  that  this  operation  can  help  our  case?  And 
this  is  to  be  done  by  compelling  the  banks  to  buy  what  are  c: 

--rve  bank  notes"  and  pay  United  States  legal-tender  notes 
for  them,  the  latter  to  be  I  -d. 

But  the  gold  redemption  of  these  reserve  note-  is  not  put  on  the 

banks  that  issue  them,  but  is  put  on  the  United  States  Treasury. 

where  in  the  bill  is  the  responsibility  for  redeeming  a  dollar 

of  paper  money  put  upon  the  banks.    How.  then,  can  this  scheme 

relieve  the  Treasury  in  the  slightest  degree: 

A  GOLD   RESERVE  TO  REDEEM  SILVER  DOLLARS. 

Third.   It  is  proposed  ultimately  to  retire  all  United  States 
^al-tender  -  "  and  these  ''bank-reserve  notes  "  as  well,  but 

stilfto  leave  the  United  States  Treasury  responsible  for  the  main- 
tenance of  parity. 

The  bill  requires  a  gold  reserve  equal  to  5  per  cent  of  our  silver 
money  to  be  kept  in  the  Treasury. 

-  retary  Gage.  ex-Secretary  Fairchild.  and  all  witnesses  before 
oe  -  i  that  the  Treasury  was  really  liable  for  the  gold  redemp- 
tion of  every  dollar  of  the  {  0  of  redeemable  money. 

y  also  said  that  for  every  dollar  of  Government  paper  with- 
drawn or  canceled  this  large  sum  would  still  be  kept  good  by  the 
issuing  of  additional  bank  currency.  *  . 

How.  then,  can  the  slightest  relief  come  to  the  Treasury  by  retir- 
ing -  of  one  "kind  of  paper  money  and  adding"  a  like 
amount  of  another  kind  of  paper  money,  when  the  Treasury  is 
equally  obliged  to  redeem  all  paper  money; 

n  it  relieve  the  Treasury  to  withdraw  the  £346,000.000 

legal-tender  notes  and  pay  out  the  $100,000,000  gold  now  held  in 

the  I        -         for  the  redemption  of  all  moneys,  and  substitute  by 

law  g  of  silver  for  legal-tender  notes  as  gold  extractors 

.  the  Treasury,  and  depend  upon  §30,000.000  of  gold  instead  of 

r  :ae  redemption  of  all  moneys': 

It  is  true  the  bill  proposes  that  no  paper  money  shall  be  issued 

to  banks  un.:.      -        jut  this  is  bad,  and  only  bad/    It  deprives  the 

country  banks  of  their  rights  to  the  tune  of  $374,000,000  of  the 

§5-note  money  we  now  have  and  can  be  no  relief  to  the  situation. 

•  are  told  that  there  will  be  such  a  demand  for  this 

:  silver  certificates  that  the  banks  can  not  get  any  of 

them  to  present  to  the  Treasury  for  gold  when  we  only  have  in 

65,  in  all  kinds  of  paper  monev.  a  total  of  $377,000,000. 


19 

Let  us  see  how  this  works  out. 

Paper  money  in  common  use  by  the  people-  ,  be  de- 

posited in  banks  five  times  a  y< 

That  shows  that  $25  I  of  these  silver  certificates  m 

necessarily  be  deposited  in  banks  by  retail  me: 
or  they  can  not  pay  their  debts. 

Is  there  any  doubt  about  foreign  bankers  and  • 
all  the  silver  money  they  want  to  demand,  any  amount  of 
the  Treasury  they  choose  to  ask  for? 

BANKS  TO  ISSUE  TAXED  PAPER  MONEY  WITHOUT  QOTBBM 

Fourth.  The  next  proposition  is  to  allow  all  banks  to  issue  cur- 
rency secured  by  bonds  up  to  the  amount  of  40  per  cent  to  capital; 
then  they  may  issue  60  per  cent  against  assets. 

This  60  per  cent  has  no  Government  guaranty:  th-  la-- 
cent  of  this  60  per  cent  is  to  be  taxed  at  the  rate  of  6  per  ceir 
annum. 

Remember,  city  banks  can  not  use  currency,  because  it  would 
come  back  to  them  the  next  morning  through  the  clearing  h 

This  tax,  therefore,  all  falls  on  country  banks.    Our 
$1,200,000,000  of  redeemable  money  is  90  per  cent  of  the  actual 
capital  of  State  and  national  banks.     The  country  banks  can 
average  to  circulate  80  per  cent;  minimum,  60;  maximum, 
average,  80  per  cent. 

Let  us  see  how  this  bill  works  out  as  between  one  extreme,  the 
central  reserve  city  banks,  and  the  other  extreme,  the  strictly 
country  banks. 

OPPRESSIVE   TO    COUNTRY    BANKS. 

It  requires  the  country  banks,  as  a  license  fee  to  do  business, 
to  buy  U nited  States  bonds  to  ten  times  the  amount  that  the  city 
banks  must  buy,  and  also  to  takeout  twice  the  amount  of  re- 
notes  the  city  banks  buy,  and  pay  for  them  in  legal-tender  n 

It  fails  to  recognize  that  bank  currency  is  identical  with  dep<  - 

Why  does  not  the  bill  require  the  central  reserve  city  bani-: 
pay  the  same  tax  on  their  deposits  in  excess  of   -       ar  cent  to 
capital:  as  the  country  banks  are  required  to  pay  on  their  dei 
in  the  form  of  currency  issued? 

The  city  banks  are  to  pay  nothing,  while  the  country  banks 
would  have  to  pay  §1.800,000.  The  Bank  of  Germany  under  this 
rule  would  be  obliged  to  pay  in  taxes  on  the  notes  it  issues 
siT. 000.000,  and  the  Bank  of  France  .s4-2.OjO.oim)  per  annum.  If 
the  central  reserve  city  banks  were  treated  the  b  jountry 

banks,  they  would  have  to  pay  in  annual  taxes  (31,000,0 

Need  any  more  be  said  to  show  how  unscientific  as  well  as  un- 
just to  country  banks  such  a  provision  would  be? 

DEPRECIATES  THE  QUALITY  OF  OCR  PAPER   MONEY 

Fifth.  The  propositions,  if  enacted  into  law,  would  make  p 
money  no  better  by  making  it  any  more  safe,  freely  issued,  abun- 
dant, uniform,  or  elastic  than  now— in  many  of  these  respects  not 
as  good. 

TO  BREAK  THE   ENDLESS  CHAIN. 

Again,  it  is  claimed  that  this  bill,  if  enacted,  will  break  the 
"endless  chain." 

I  really  do  not  think,  bad  as  it  is.  that  the  bill  is  as  bad  as  that. 
We  all  know  that  the  condition  precedent  to  the  e  of  the 

poorest  kind  of  promise  to  pay  that  can  be  called  money  is  that 
it  is  in  its  circulation  an  "endless  chain."' 

When  it  really  stops  moving  in  potential  and  actual  gold  re- 

3743—4 


50 

demption  it  is  indeed  very  poor  stuff.     So  much  for  the  final 
effort  at  financial  reform. 

CITY   HANKS  TAN    NOT   KEEP  THEIR  CURRENCY  IN  CIRCULATION. 

Because  banks  in  large  cities  can  not  keep  any  considerable 
amount  of  currency  in  circulation  in  normal  times  is  no  reason 
why  they  should  not  take  out  true  bank  currency,  as  it  would  be 
no  expense  to  them  when  not  in  circulation  under  a  proper  bank- 
ing law. 

Banks  in  cities  doing  a  country  business  can  probably  keep  m 
circulation  an  amount  equal  to  10  to  20  per  cent  to  capital;  but 
the  average  in  all  banks  would  be  scarcely  5  per  cent.  It  did  not 
average  10  per  cent  in  1860,  when  far  more  could  be  used  by  city 
banks  than  now. 

This  would  leave  about  $200,000,000  of  currency  in  the  reserve 
cities  that  might  be  deposited  in  the  clearing  houses  as  an  "  emer- 
gency fund, ''being  contributed  to  the  clearing  house  in  each  city 
pro  rata  to  capital. 

This  fund  could  be  loaned  to  banks  to  the  amount  of  75  per  cent 
of  face  value  of  approved  commercial  paper  deposited  as  security. 

Such  an  arrangement  would  not  be  open  to  the  objections  that 
lie  against  a  "  clearing-house  currency." 

A  LIMITED  UNION  OF  ALL  BANKS  NECESSARY. 

To  unite  all  banks  of  loan  and  discount  under  the  sanction  of 
law,  through  clearing  houses,  is  fundamental  to  any  relief  to  the 
situation  so  long  as  we  have  two  or  more  legal-tender  moneys. 

Let  the  United  Kingdom  wake  up  some  fine  morning  and  find  in 
her  legal-tender  money  one-half  the  amount  of  silver  we  have, 
and  at  16  of  silver  to  1  of  gold  she  would  be  on  a  silver  basis  in  a 
week,  unless  her  independent  banks  were  in  some  way  united  into 
a  solid  union  to  maintain  parity. 

Let  the  Bank  of  France  be  divided  into  as  many  independent 
banks  as  she  has  branches,  and  she  could  by  no  possibility  main- 
tain parity  between  her  paper  money,  silver,  and  gold. 

THE  UNION  OF  ALL  BANKS  NOW   EXISTS. 

We  now  do  it,  through  the  union  of  all  the  banks,  in  the  United 
States  Treasury,  and  by  the  Treasury  being  a  member  of  the  New 
York  clearing  house,  but  at  an  enormous  expense  and  great  daily 
peril,  as  I  have  shown. 

BAD  LEGISLATION  8HOULD  BE   RESISTED. 

Can  I  be  justly  criticised  for  not  favoring  a  scheme  that  would 
pile  up  several  hundred  millions  more  than  there  now  is  in  the 
Treasury  and  increase  expenses  by  ten  to  fifteen  millions  per 
annum,  and  then  leave  us  in  a  worse  plight  than  we  now  are? 

WHY  NOT  REFORM  BY  DEGREES? 

But  why  not  reform  our  currency  by  degrees,  allowing  the 
people  the-  benefit  of  a  part  now? 

Yes;  why  not  build  a  bridge  across  a  river,  requiring  four 
arches,  by  installments,  building  one  arch  and  let  the  people  use 
that,  and  a  few  years  later  the  second,  and  so  on?  No  relief  can 
come  to  travel  without  a  completed  bridge.  So  with  banking  and 
currency  reform. 

Let  me  say  again: 

First.  To  abolish  reasonable  fear  and  to  prevent  1893  panics  the 
United  States  Treasury  must  be  relieved  from  the  current  redemp- 
tion of  all  paper  money  and  of  maintaining  parity. 

Second.  The  maintaining  parity  must  be  devolved  by  law  on  the 


51 

only  agency  known  to  man  that  is  capable  of  discharging  that 
function,  viz,  banks. 

Third.  Securely  uniting  all  commercial  banks  through  cleai 
houses,  bylaw,  to  maintain  parity,  and  leave  them  aa  Lndependenl 
in  all  other  things  as  now. 

Fourth.  Restore  to  banks  the  right  to  issue  currency 
their  assets,  enjoyed  by  all  other  banks  the  world  over  and   by 
every  bank  in  this  country  until  the  people  were  robbed  of  it  iii 
l^ii:;  in  order  to  levy  a  forced  loan  upon  them  to  make  a  ma 
for  bonds. 

TnE   DOMINANCE  OF   PETTY    AMIilli 

Finally,  no  man  or  class  of  men  have  any  moral  right  to  force 
themselves  between  the  people  for  their  personal  aggrandizement, 
insisting  on  any  particular  bill,  and  refusing  to  consider  theai 
of  official  figures  and  facts  conclusive  in  the  matter  that  1  have 
presented  here  and  elsewhere. 

WISDOM,    PREJUDICE,    ETC. 

Neither  must  it  be  forgotten,  as  it  has  been  thus  far,  that  every 
form  of  wisdom,  prejudice,  and  ignorance  that  pervades  the  mi 
of  our  people  is  represented  in  Congress,  and  must  be  reck 
with. 

Any  bill  drawn  by  any  man  that  makes  sure  each  of  the  four 
things  necessary  to  complete  the  financial  bridge  should  have  the 
support  of  every  one  of  us. 

Any  bill  that  fails  in  any  one  of  them  would  be  an  economic 
and  political  blunder  equal  to  a  crime.  It  would  not  compliment 
our  statesmanship  and  should  have  our  active  opposition. 

STATEMENT  OF  USE  OF  GOLD  ELABORATED. 

The  misapprehension  as  to  the  use  made  of  gold  arises  from  the 
fact  that  the  movement  of  gold  is  not  studied  upon  the  facts  of 
its  actual  use  and  the  ascertained  facts  brought  to  the  test  of  in- 
ductive reasoning,  but  rather  upon  the  assumption  of  error  to  be 
fact,  and  then  deducing  certain  alleged  facts  from  the  errors  and 
proclaiming  them  for  truth. 

TWO  REALMS    OF  WEALTH:    HANKS  OF  LOAN  AND  DISCOUNT;   Till  >T 

COMPANIES. 

There  are  two  realms  of  wealth,  the  borders  of  which  are  con- 
stantly changing  and  apparently  intermingling,  viz:  Productive 
wealth,  mostly  real  estate  and  its  developments,  and  consumable 
wealth,  mostly  products  and  their  making  and  handling. 

Gold  coin  (as  coin)  can  not  be  consumed  and  can  earn  no  income. 
It  is  neither  productive  wealth  nor  consumable  wealth.  It  simply 
measures  the  value  expressed  in  all  paper  obligations, 

Banks  of  discount,  currency  and  coin,  about  s4. him, 000. 000,  are 
inextricably  mixed  together,  each  being  a  part  of  the  other.  They 
handle  only  consumable  wealth,  valued  at  s-2.1,000,000.000.  They 
are  very  slightly  affected  by  the  handling  of  or  the  movement  of 
productive  wealth. 

Saving  banks,  loan  and  trust  companies,  investment  companies, 
building  and  loan  companies,  insurance  companies,  cooperate 
banks,  benefit  associations,  etc.,  as  well  as  individuals,  unlike 
banks  of  discount  and  deposit,  handle  productive  wealth,  exclu- 
sively, valued  at  §40,000,000,000.  Each  class  of  moneyed  Institu- 
tions fails  in  the  sphere  of  the  other.  While  wealth  is  always  in 
process  of  being  transferred  from  one  realm  to  the  other,  the  per- 
centage of  transfers  as  compared  with  the  whole  volume,  in  Dor- 
mal  conditions,  is  infinitesimal  and  of  no  appreciable  influem ». 

■4742 


The  balance  in  such  movements  only  shows  that  the  accumulations 
in  one  realm  can  be  more  profitably  employed  in  the  other. 

MONETARY  CRISES  OR  PANICS. 

Monetary  crises  or  panics  always  begin  in  the  realm  of  consum- 
able wealth.  Demands  are  then  immediately  made  on  the  pro- 
ductive realm  to  supply  any  vacuum  made  by  a  panic  in  the  con- 
sumable realm  for  stocks,  bonds,  etc..  for  export,  that  otherwise 
would  have  to  be  answered  by  gold.  Of  course  it  is  individuals 
embarrassed  by  the  panic  that  have  to  furnish  these  so-called 
solid  securities.  The  popular  forms  of  expression  are,  as  to  par- 
ticular persons,  "He  has  gone  too  deeply  into  real  estate  or  rail- 
roading'* and  "He  tried  to  own  his  plant  when  he  ought  to  have 
hired  it,"  etc. 

GOLD  SCARCELY  MOVES. 

For  the  reason  given  gold  never  actually  "moves"  in  large  vol- 
umes. It  is  inevitable  that  millions  of  bonds  and  stocks  take  the 
place  of  gold,  as  all  experience  prove  they  do.  The  following 
tables  establish  and  enforce  these  facts,  as  they  show  gold  scarcely 
ever  moves  to  any  great  amount. 

GOLD  FREE  TO  MOVE. 

When  currency  and  coinage  laws  leave  gold  free  to  move  in 
compliance  with  the  laws  of  trade,  it  is  in  accordance  with  all 
business  experience  that  gold  never  moves  from  or  into  any  coun- 
try to  any  amount  greater  or  smaller  than  is  necessary  to  restrain 
or  induce  to  normal  conditions  the  business  activity  of  the  coun- 
try, any  more  than  the  balls  of  the  regulator  of  the  engine  describe 
a  circle  of  more  or  less  diameter  than  is  necessary  to  keep  the  en- 
gine at  its  normal  speed. 

IMPORTING  OR  EXPORTING  GOLD. 

The  importing  or  exporting  of  gold  is  regulated  by  the  impera- 
tive demands  of  the  foreign  trade  of  a  country,  and  is  not  actual 
to  any  extent  but  potential.  The  things  really  imported  or  ex- 
ported for  gold,  their  price  being  forced  up  or  down  to  cause  the 
doing  of  it,  are  stocks  and  bonds,  titles  to  productive  wealth 
brought  out  of  the  realm  of  productive  wealth  into  the  realm  of 
consumable  wealth  to  be  imported  or  exported,  as  the  case  may 
be,  in  place  of  gold. 

PAPER-MONEY  OBLIGATIONS. 

Of  course  every  money  obligation  known  to  finance  in  banking, 
as  paper  money,  note,  or  draft,  is  a  title  to  the  whole  or  some 
part  of  consumable  wealth.  Whether  it  be  near  or  at  the  anti- 
podes is  wholly  immaterial  to  the  bank.  The  financier  or  banker 
takes  no  cognizance  of  the  location  or  movement  of  products  to 
which  he  has  a  title.  He  cares  only  for  their  value  and  safety. 
Therefore,  whether  the  merchant  in  Chicago  or  Cincinnati  buvs 
products  in  San  Francisco,  New  York.  Liverpool,  Paris,  China, 
Japan,  or  Mexico,  obligations  of  ownership  of  which  come  into 
p<»session  of  a  banker,  their  payment  has  no  influence  on  the 
movement  of  the  world's  measure  of  value  metal  between 
countries,  whether  it  be  silver  or  gold,  as  payment  is  not  made  in 
gold,  but  in  titles  to  products. 

NO  TRADE  BETWEEN    COUNTRIES. 

There  is  no  trade  between  countries.  The  ocean  or  national 
boundaries  are  not  known  to  trade.  All  trade  is  between  indi- 
viduals. The  movement  of  gold  across  the  ocean  has  no  more 
significance  than  its  movement  across  any  parallel  of  latitude  or 


53 

longitude.    As  the  world's  measure  is  now  a  grain  of  gold.  I  use 
the  word  gold  for  brevity.    The  ownership  of  products  being  In 
any  country,  or  the  movement  of  products  theniselvi 
country  to  another,  gives  no  hint  of  what  the  movemenl  of  gold 

will  be. 

roi'l    I.Alt    IIKI.II'.K. 

The  law  of  the  movement  of  gold  is  as  inexorable  but  different 
from  the  law  governing  the  movement  of  other  producl 
the  popular  belief  as  to  how  and  why  gold  is  required  for  ship- 
ment from  one  city  to  another,  or  from  one  country  to  another, 
has  no  foundation  in  fact  is  abundantly  proven  by  the  ann< 
tables.  When,  why,  or  how  economic  law.  left  free  to  act,  as  It 
is  not  in  this  country,  will  compel  the  actual  shipment  of  gold  is 
not  easy  of  statement  in  a  paper  like  this. 

MEN   STBUOQLID   Foil    PBODU" 

A  struggle  for  gold  between  individuals  or  nations  is  apparent 
rather  than  real.  It  is  really  the  struggle  of  men  for  products  and 
of  titles  to  products  to  adjust  the  balances  in  exchange  that  is 
seen.  When  the  point  is  reached  for  gold  shipments,  increased  dis- 
count rates  for  business  paper  always  depreciate  stocks  and  bonds, 
and  these  titles  to  fixed  property  are  shipped  instead  of  gold.  It 
is  the  same  as  the  repression  of  and  the  struggle  of  steam  for  re- 
lease from  confinement  that  gives  power  to  the  engine — gold  act- 
ing in  the  movement  of  products  as  the  regulator  does  to  the 
engine.  It  is  as  objectionable,  and  no  more  so,  as  is  the  strug- 
gle of  water  to  find  its  level  that  causes  it  to  turn  the  water 
wheel  that  moves  thousands  of  spindles.  It  is  the  duplicate  in 
ethics  of  the  struggle  of  conflicting  truths  to  adjust  themselves  in 
practical  and  beneficent  results  in  advancing  civilization.  Com- 
mercial gold  is  the  "regulator"  to  commerce  as  surely  as  tin- 
engine  regulator  is  to  it. 

ACTUAL  SHIPMENT  OF  GOLD. 

These  tables  show  that  an  actual  shipment  or  movement  of  gold 
does  not  depend  upon  and  is  not  influenced  by  the  fact  that  the 
balance  of  trade  is  for  or  against  a  city  or  country,  or  whether  a 
city  or  country  is  a  debtor  or  creditor  city  or  country,  but  wholly 
upon  the  condition  of  the  credit  of  the  holder  of  gold,  whether  it 
is  good  or  bad,  and  whether  his  credit  is  becoming  better  or  getting 
worse.  They  also  show  that  individuals  and  nations  use  less  and 
less  gold  as  they  advance  in  intelligence,  are  more  peaceful,  and 
are  richer. 

We  now  use  only  $6,000,000  or  $8,000,000  of  coin  a  day  for  domes- 
tic trade  and  to  export.  Let  a  proper  banking  bill  become  a  law. 
with  aproper  clearing-house  system,  and  not  $2,000,000  a  day  would 
be  used  when  all  banks  in  the  country  are  operating  under  it. 

INTERNATIONAL  CLEARING    HOUSB. 

With  the  establishment  of  an  international  clearing  house,  which 
is  soon  to  come,  scarcely  more  than  that  sum  would  be  used  each 
day  in  the  whole  world.     In  fact,  as  extremes  always  meet,  and 
as  there  is  nothing  new  under  the  sun.  and  all  things  come  again, 
the  time  is  soon  corning  when  all  the  eleai  ings  of  the  world's  com- 
merce will  be  made  each  day,  by  telephone  and  telegraph,  at  a 
single  point.     It  will  be  simply  the  changing  of  gold  at  s 
point  from  one  account  to  another  in  a  clearing  house,  as  in  the 
days  when  the  balances  of  the  commerce  of  the  world  wei 
tied  in  the  Bank  of  Venice,  but  little  gold  going  in  or  coming 
of  that  bank,  and  by  the  simple  transfer  from  one  account  to 
3743 


54 

another  of  the  final  balance  of  each  merchant  in  all  countries  in 
the  world's  commerce. 

THE  GOLD  PROBLEM. 

The  difficulty  economists  and  financiers  now  find  in  the  use  of 
silver  is  as  sure  to  confront  us  as  to  gold,  only  with  tenfold  more 
difficulty,  before  fifty  years  are  passed  as  anything  not  yet  proved 
by  actual  occurrence  Inventions  and  new  methods  are  fast  rele- 
gating nearly  all  the  coin  currency  of  commerce  to  innocuous 
desuetude. 

It  is  foreign  commerce  only  that  tests  the  "  measure-of- value 
metal ''as  to  quantity  in  any  financial  system,  according  to  the 
theory  of  those  who  fear  gold  depletion.  Experience  rightly  set- 
tles all  economic  questions.  England  has  maintained  gold*  pay- 
ments for  eighty  years  by  having  from  5  to  6  per  cent  of  visible 
gold  to  her  total  commerce. 

The  United  States  has  had  for  years  from  16  to  18  per  cent  of 
visible  gold  to  her  foreign  commerce.  Again,  the  United  States 
accumulated  over  $300,U00,000  of  gold  during  the  suspension  of 
specie  payments.  India  exports  and  imports  her  gold  freely  and 
in  large  quantities,  as  does  Mexico,  China,  Japan,  and  all  other 
silver  countries— as  to  that  matter,  as  do  all  gold-measure-value 
countries.  These  two  facts  alone  confound  the  popular  theory  as 
to  the  demands  for  and  movement  of  gold. 

The  United  States,  again,  exports  gold  averaging  24  per  cent  of 
gold  to  the  balance  in  her  favor  of  exports  over  imports  of  mer- 
chandise, while  England  does  exactly  the  contrary.  The  United 
States  produces  from  her  mines  33  per  cent  more  than  her  excess 
of  exports. 

England,  contra  to  the  United  States,  imports  from  4  to  8  per 
cent  of  gold  to  the  excess  of  her  imports  over  her  exports.  This 
again  proves  the  popular  theory  of  the  movement  of  gold  a  delu- 
sion. 

The  figures  of  production  and  accumulation  of  gold  are  exceed- 
ingly interesting,  and  confusing  as  well,  excepting  to  those  who 
"know  it  all." 

The  world's  production  of  1891  to  1897,  inclusive,  was  $1,254,922,600. 

In  that  time  the  visible  gold  in  England  increased $48,732,500 

In  that  time  the  visible  gold  in  France  increased 118  752  900 

In  that  time  the  visible  gold  in  the  United  States  increased 28,' 673,' 587 

In  that  time  the  visible  gold  in  Germany  increased 32,250,300 

Increase  of  visible  gold  in  the  four  countries 228,409.287 

Where  the  other  §1,026,513,313  is,  is  only  known  to  the  wise 
ones  who  know  all  there  is  to  know  about  the  movement  of  gold. 
The  world's  production  of  gold  is  increasing  with  very  great  ra- 
pidity, going  from  $131,000,000  in  1891  up  to  $237,500,000  in  1897. 
Of  course  we  have  no  means  of  ascertaining  the  amount  of  com- 
mercial gold  in  India  or  any  other  "silver  measure  of  value" 
country,  but  India  has  exported  more  than  she  has  imported  from 
the  years  1891  to  1894,  inclusive,  $22,000,000  in  gold,  and  produces 
none. 

With  a  balance  of  trade  in  favor  of  India  in  1891  of  $183,000,000, 
she  also  imported  $11,000,000  of  gold.  In  1892,  with  a  balance  of 
trade  in  her  favor  of  $191,000,000.  she  exported  $13,000,000  of  gold. 
In  1893,  with  a  balance  of  trade  in  her  favor  of  $134,000,000.  she 
imported  $3,000,000.  With  exports  over  imports  of  merchandise 
m  1894  of  $168,000,000,  she  exported  $23,000,000  of  gold. 

The  United  States  from  1891  to  1897  has  exported  in  excess  of 
3742 


55 

her  imports  of  gold  the  enormous  sum  of  $324,976,000,  bnl  shehaa 
increased  in  that  time  her  store  of  visible  gold  by  $78,715,00 
she  has  produced  $298,691,000  in  gold. 

CAUSES  OF  THE  MOVEMENT  OF  GOLD. 

What,  then,  do  these  gold  tables  and  gold  figures  prove,  espe- 
cially with  the  example  of  the  Bank  of  England  before  OS?     &b 
solutely  nothing,  excepting  that  the  statements  made  as  to  tin- 
causes  of  the  actual  movement  of  gold  have  not  the  b! 
foundation  in  fact. 

Second.  That  just  so  far  as  the  credit  of  banks  is  above  the 
slightest  suspicion  and  interest  rates  rise  above  the  normal  level 
will  gold  flow  to  them,  and  that  just  so  far  as  there  is  a  doubt  of 
the  future  ability  or  inclination  of  bankers  to  pay  gold,  or  as  they 
reduce  interest  below  the  normal  level,  will  gold  How  from  them. 

Third.  That  trade  is  in  no  wise  between  nations,  but  is  always 
between  individuals,  and  knows  no  national  boundaries,  tarif; 
no  tariffs,  excepting  as  tariffs  help  or  hinder  trade  between  indi- 
viduals in  one  country  and  individuals  in  another  country:  thai  it 
is  arrant  nonsense  to  talk  of  the  boundaries  of  a  country  having 
any  more  relation  to  the  movement  of  gold  than  do  the  lines  of 
latitude  or  longitude. 

DISPUTE  EVERY   POPULAR  THEORY. 

Space  will  not  allow  a  thorough  analysis  of  the  gold  tables. 
Studying  them,  any  candid  man  will  be  convinced  beyond  ques- 
tion that  they  dispute  every  popular  theory  concerning  gold  and 
show  it  practically  to  stand  still  in  every  country,  without  regard 
to  trade  balances  or  whether  the  countries  are  what  are  called 
"debtor  countries"  or ''creditor  countries,'' and  that  each  most 
of  necessity  have  the  gold  necessary  to  it  to  carry  on  the  foreign 
commerce  of  the  country,  whether  silver  or  gold  measure  of  value 
countries. 

HOW  GOLD  MEASURES  VALUE. 

Gold  measures  value  in  exchanging  paper  obligations,  which  are 
potentially  products  themselves,  precisely  as  do  scales  and  meas- 
ures in  the  warehouses  of  countries,  and  this  regardless  of  whether 
the  country  is  a  gold  measure  of  value  country  or  silver  measure 
of  value  country. 

About  187-4  every  country  found  itself  being  overloaded  with 
silver  coin.  Now  every  country  is  being  overloaded  with  gold 
coin  as  well.  The  production  of  gold  is  also  rapidly  increasing, 
while  the  necessity  for  its  use,  especially  in  commercial  transac- 
tions, is  rapidly  decreasing.  New  commercial  devices,  needing  no 
coin,  are  very  rapidly  coming  into  use.  It  is  therefore  clear  that 
the  next  generation  will  be  confronted  with  a '  'gold  problem'-  beside 
which  the  "silver  problem"  of  this  generation  is  child's  play. 

3742 


56 


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55th  OonCxRESS,  )  HOUSE  OF  REPRESENTATIVES,  J  Bbp'T  1575, 
2d  Session.       )  (       Part  2. 

[Especially  note  pages  175  to  180.] 
TO  SECURE  TO  THE  PEOPLE  A  SOUND  CURRENCY. 


June  23,  1898. — Committed  to  the  Whole  Bouse  on  the  state  of  the  Union  aud 

ordered  to  be  printed. 


Mr.  Walker,  of  Massachusetts,  from  the  Committee  on  Bankiug  and 
Currency,  submitted  the  following 

VIEWS  OF  THE  MINORITY. 

[To  accompany  H.  R.  10289.1 

The  undersigned  respectfully  dissents  from  the  views  of  the  signers 
of  the  favorable  report  on  bill  H.  R.  10289,  and  recommends  that  all 
after  the  enacting  clause  be  stricken  out  and  the  text  of  bill  II.  R.  10,333, 
introduced  in  the  House  by  Mr.  Walker  and  referred  to  the  Committee 
on  Banking  and  Currency,  be  inserted  in  its  place. 

WALKER  BILL   THE   ONLY  REMEDY. 

I  can  see  no  conceivable  relief  from  the  present  financial  and  banking 
conditions  of  the  country,  but  on  the  other  hand  the  certainty  that  it 
would  be  made  worse  by  enacting  any  general  bill  referred  to  the  com- 
mittee, excepting  the  Walker  bill  H.  R.  10333,  and  the  bills  before  the 
committee  have  steadily  grown  worse,  culminating  in  the  Hill-Fowler 
bill,  H.  R.  10289. 

Not  one  of  the  bills  presented  to  the  Committee  on  Banking  and 
Currency,  except  the  Walker  bill,  recognizes — much  less  fearlessly  and 
closely  follows — any  known  principle  of  economics  or  any  recognized 
banking  principle.  Not  one  of  them  except  the  Walker  bill  safely 
and  securely  does  any  one  of  the  four  things  absolutely  necessary  to 
be  done  to  relieve  the  situation,  viz, 

1.  To  relieve  the  United  States  Treasury  from  the  current  redemption 
of  every  form  of  paper  money  and  from  any  responsibility  for  maintain- 
ing the  parity  of  our  various  kinds  of  money. 

2.  The  devolving  of  the  duty  and  responsibility  of  maintaining  parity 
between  all  moneys  upon  the  banks. 

3.  The  allowing  of  banks  to  issue  true  bank  currency — i.  e.,  to  issue 
currency  against  their  assets. 

4.  The  securely  uniting  all  the  commercial  banks  in  the  country 
through  clearing  houses  into  one  strong  body  to  maintain  parity  between 
all  moneys. 

From  the  first  section  to  the  last  section  the  two  bills  are  antagonistic. 

b  &  a 9  VJl) 


130        STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 

Prom  the  opening  to  the  close  it  is  the 


Hill  Fowler  bill,  )  ...versus 


(   Walker  bill, 
H.  R'iom"7  j VerSUS J   U.K.  10333. 

The    results    of)                             vorsua  C  The  results  of 

ratiocination     S *  investigation. 

A  putting  into  the  present^  ( A  putting  into  the  present 

law  things  new,  incon-  I  „___„  J  law  thiugs  old,  harmoni- 
gruons,  and  untried,  or  f  " ' " vcl&Ub-  ■  ■  ^  ous,  and  approved  by  ex- 
that  have  tailed  J  I     perience. 

The  Hill-Fowler  bill  (H.  R.  10289)  does  not  propose  to  and  does  not 
effect  a  solid  union  of  the  commercial  banks  of  the  country.  It  leaves 
each  bank  in  its  present  inflexible,  isolated,  and  panic  condition.  It 
thereby  leaves  out  of  its  scope  its  avowed  purpose  and  makes  it  impos- 
sible of  being  accomplished  by  the  bill. 

The  Walker  bill,  on  the  other  hand,  is  written  in  accord  with  recog- 
nized economics,  and  adheres  in  every  sentence  to  sound  banking 
principles,  it  secures  a  solid  union  of  all  commercial  banks  into  a  log- 
ical system  and  provides  for  the  safe  and  complete  transition  of  every 
commercial  bank  in  the  country,  were  it  done  even  during  a  panic,  from 
its  present  inflexible,  isolated,  and  panic  condition  into  an  elastic, 
cooperative,  anti-panic  system,  and  makes  it  an  integral  part  of  a  sym- 
metrical and  firmly  constructed  and  completed  whole,  which  is  abso- 
lutely necessarv  as  a  condition  precedent  to  any  substantial  relief  of 
the  United  States  Treasury  and  banking  conditions  in  any  safe  and 
wise  financial  and  banking  legislation. 

UNION   OF   ALL   COMMERCIAL   BANKS. 

The  warp  and  woof  of  the  Walker  bill  is  the  taking  of  every  com- 
mercial bank  in  the  country  out  of  its  perilous  condition  of  isolation, 
which  invites  and  contributes  to  such  panics  as  have  frequently  visited 
them  during  their  whole  existence,  by  allaying  antagonism  and  shut- 
ting out  all  injurious  competition  and  rivalry  between  banks,  induced 
by  their  isolation,  through  clearing  houses  that  now  exist.  Thus  it  is 
made  sure  that  the  banks  will  maintain  parity,  by  making  it  for  the 
interest  of  each  bank  to  assist  all  other  banks  in  doing  so,  by  uniting 
all  banks  in  one  symmetrical  whole  to  enable  them  in  combination  to 
maintain  parity  successfully,  which  is  impossible  in  isolation,  i.e.,  main- 
tain the  parity  between  silver  coin  and  gold  coin,  and  maintain  the 
parity  between  all  the  various  forms  of  our  paper  money  and  our  coin 
money  by  making  it  profitable  for  the  banks  to  do  so,  and  forcing  it 
upon  unpatriotic  and  reluctant  banks  by  a  tax  of  one-half  of  1  per  cent 
per  annum  on  deposits  if  the  banks  as  a  whole  fail  to  maintain  parity, 
and.  unlike  the  Bill- Fowler  bill,  cutting  the  banks  and  individuals  off 
from  getting  any  gold  out  of  the  United  States  Treasury  under  any 
circumstances. 

MAINTAINING  PARITY. 

The  Hill-Fowler  bill  does  the  exact  opposite  of  the  Walker  bill. 
Enacted  into  law  it  would  call  for  more  gold  from  the  Treasury  and 
heavier  taxation  to  maintain  parity  under  the  present  Treasury  system, 
and  make  conditions  worse  than  they  now  are. 

Its  effect  can  be  certainly  predicted  from  the  experience  of  the  past, 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  131 

not  only  of  this  country  but  of  all  others.  Isolated  banks,  each  inde- 
pendent of  the  other,  in  no  country  have  found  it  possible  to  keep  silver 
coin  and  gold  coin  at  a  parity  and  freely  circulating  side  by  side  as  it 
is  assumed  they  can  do  in  the  Hill  Fowler  bill.  Parity  never  lias  been 
kept  between  gold  and  silver,  excepting  where  the  hanks  were  united  to 
do  it.  Not  an  example  can  be  found  to  justify  the  Hill-Fowler  experi- 
ment. The  experience  of  this  country  and  of  all  others  fails  to  justify 
it.  The  sharp  rivalry  between  our  independent  hanks,  prior  to  1834, 
compelled  every  bank  in  the  country  to  redeem  its  circulating  notes  in 
silver  dollars,  because  the  value  of  the  bullion  in  the  silver  dollar  was 

3  to  4  per  cent  less  than  the  bullion  in  the  gold  dollar.    After  1834  not 

a  silver  dollar  was  paid  in  redeeming  its  circulating  notes  by  any 
isolated  bank  in  the  country,  because  the  bullion  in  the  new  silver 
dollar  was  worth  from  .'5  to  -1  per  cent  more  than  the  bullion  in  the  gold 
dollar.  Banks  had  silver  dollars  in  their  vaults,  hut  they  always 
insisted  ou  a  premium  of  3  to  4  per  cent  in  paying  them  out. 

NEW  YORK  CLEARING  HOUSE. 

Parity  is  now  maintained  in  this  country  by  the  United  States  Treas- 
ury, by  the  Treasury  being  a  member  of  the  New  York  clearing  house, 
thus  making  the  United  States  Treasury  ultimately  responsible  for  its 
transactions  at  an  annual  cost  of  scores  on  scores  of  millions  of  dollars 
taken  from  the  people  in  taxes.  To  do  this  also  requires  that  hundreds 
of  millions  of  dollars  shall  at  all  times  be  in  the  Treasury,  practically 
as  a  guaranty  of  its  solvency,  for  maintaining  parity. 

The  national  banking  law  has  come  to  be  one  of  the  most  oppressive 
legacies  of  the  civil  war,  in  its  continued  forced  loans  on  the  people  in 
compelling  the  purchase  of  United  States  bonds.  The  Hill-Fowler  bill 
proposes  to  continue  it  for  eight  years.  It  differs  as  much  from  the 
freedom  and  independence  of  normal  and  free  banking  and  the  issuing 
of  normal  bank  currency  as  does  martial  law  and  the  provost-marshal 
from  normal  liberty  and  the  jury  trial. 

BANK   OF  ENGLAND   SYSTEM   COPIED. 

But  the  most  illogical,  uneconomic,  and  indefensible  proposition  in 
the  whole  list  of  things  proposed  to  be  done,  and  a  thing  not  consistent 
in  a  law  drawn  on  true  banking  principles,  is  the  proposal  to  create  in 
the  United  States  Treasury  a  department  of  issue  and  redemption. 
Such  a  department  would  be  not  only  useless,  but  wholly  vicious. 

If  there  is  one  thing  more  than  another  that  is  well  settled  in  the 
management  of  banks,  treasuries,  corporations,  and  private  linns,  it  is 
this,  viz,  that  every  dollar  of  what  is  designated  "money  funds"  must 
be  at  the  free  use  of  the  responsible  manager  of  them,  especially  in  times 
of  panic. 

The  avowed  reason  for  creating  this  department  is  to  destroy  the 
United  States  legal-tender  notes  directly  or  indirectly,  either  by  chang- 
ing them  into  a  gold  certificate  or  by  canceling  them  outright.  To  resort 
to  such  a  cumbersome  device  for  that  purpose  could  only  have  been  sug- 
gested by  the  double-headed  contrivance  in  the  Bankof  England.  I; 
has  been  condemned,  as  to  the  Bank  of  Ihiglaud.hy  nearly  every  writer 
on  finance  in  Europe  and  by  the  best  thought  in  England.  It  has  never 
once  been  approved  in  the  whole  world  by  the  only  possible  method  of 
expressing  a  genuine  upproval  of  a  financial  device,  viz,  by  imitation. 
I  shall  treat  further  on  this  subject  in  closing  this  report. 


132       STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 

The  Hill-Fowler  bill  attempts  the  impossible  feat  of  grafting  on  to  the 
Government  Treasury,  which  has  no  banking  resources  or  banking 
machinery,  the  double  headed  Bank  of  England  issue  department  and 
banking  department  system,  winch  is  unworkable  excepting  by  a  bank 
with  the  immense  resources  and  in  the  strong  position  of  the  Bank  of 
England.  It  is  believed  by  every  European  financier  to  be  a  source  of 
the  most  grave  embarrassment  and  peril  to  the  Bank  of  England  in  times 
of  monetary  stringencies  or  panic.  The  bill  proposes  this  without  tak- 
ing cognizance  of  the  conditions  here  as  compared  with  the  conditions 
in  Great  Britain,  should  (heat  Britain  wake  up  some  fine  morning  and 
find  in  her  coinage  system  $500,000,000  of  silver  as  full  legal  tender  at 
16  of  silver  to  1  of  gold,  she  would  go  to  a  silver  basis  in  a  week,  unless 
all  her  banks  were  united,  either  voluntarily  or  under  compulsion  of 
law,  into  a  solid  and  indestructible  union,  as  is  provided  in  the  Walker 
bill. 

Should  the  Bank  of  France,  with  its  hundreds  of  branches,  be  dis- 
solved to  day  into  as  many  independent  and  isolated,  antagonistic  banks 
as  it  has  branches,  as  our  banks  are  now  isolated  and  independent  and 
antagonistic  to  each  other,  France  would  go  to  a  silver  measure  of  value 
in  a  week.  Nothing  keeps  the  paper  money  of  France  or  Germany  at 
a  parity  with  specie  and  silver  to  the  "gold  measure  of  value"  other 
than  tiie  union  in  each  country  of  all  the  banks,  practically  if  not 
actually  branches  of  one  bank  and  thus  brought  into  a  solid  union,  as 
is  provided  for  the  banks  of  this  country  in  the  Walker  bill:  and  noth- 
ing keeps  the  money  of  the  Empire  of  Great  Britain  to  parity  with  the 
gold  measure  of  value  but  her  coinage  conditions,  in  which  there  is  no 
"primary  legal  tender  silver  money." 

Our  banks  are  loosely  held  together  to-day  only  through  the  sub- 
treasury,  with  its  $200,000,000  to  $300,000,000  idle  surplus,  and  sale  of 
bonds  to  maintain  parity  in  times  of  panic,  taxing  the  people  millions 
upon  millions  to  do  it,  instead  of  keeping  a  balance  of  only  $20,000,000 
to  $30,000,000  in  the  Treasury,  as  is  the  case  in  France,  Germany,  and 
Great  Britain  at  comparatively  no  cost  in  taxation. 

GOLD  REDEMPTION   OF   SILVER. 

To  provide  that  our  $500,000,000  legal-tender  silver  dollars  shall  be 
redeemable  in  gold  dollars  by  the  Government,  and  for  keeping  an 
additional  gold  reserve  for  that  purpose,  is  one  of  the  most  unnecessary, 
inconsistent,  and  remarkable,  not  to  say  ridiculous,  provisions  that 
could  well  be  incorporated  in  a  banking  bill.  Do  they  not  know  that 
this  is  demonetizing  silver?  This  seems  especially  so  in  view  of  the 
ease  with  which  France  and  Germany  carry,  at  par  with  gold  and  as 
primary  money,  their  great  stocks  of  silver.  But  the  objective  claimed 
as  of  vital  importance  to  be  reached  by  the  Hill-Fowler  bill  is  the 
elimination  of  the  United  States  notes  from  demanding  gold  of  the 
Treasury,  either  by  making  them  a  part  of  the  bank  notes,  viz,  by  sub- 
stituting for  them  the  "national  reserve  notes"  of  the  Hill-Fowler  bill, 
to  be  issued  in  place  of  them,  or  by  buying  them  up  by  the  Gov- 
ernment with  the  taxes  collected  and  then  destroying  them.  The  Hill- 
Fowler  bill  does  not  do  this  by  inducing  the  banks  to  assume  the 
identical  United  States  notes  by  making  it  profitable  for  them  to  do  so, 
as  in  the  Walker  bill,  but  by  attempting  to  substitute  a  new  "legal- 
tender  bank  note"  for  them.  The  reason  given  for  proposing  the 
destruction  of  the  $340,000,000  of  greenbacks  is  that  they  "  menace 
our  whole  financial  system  in  their  power  to  extract  gold  from  the 
Treasury." 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  133 

SILVER   DEMONETIZED. 

But  the  Hill-Fowler  bill  proceeds,  in  the  same  bill  that  would  destroy 
them,  to  add  $500,000,000  of  silver  dollars  to  their  national  reserve  bank 

notes  and  other  bank  notes  as  abstractors  of  gold  from  the  Treasury, 
and  would  have  us  believe  that  this  is  a  cure  for  all  our  financial  and 
banking  ills. 

Having  experienced  the  delights  of  the  vision  of  seeing  the  United 
►States  notes  destroyed  and  of  resurrecting  a  bank  note  from  their 
ashes,  in  the  proposed  "  national  reserve  note,"  and  having  exercised 
the  supreme  power  of  making  this  '-national  reserve  note"  the  equal  of 
gold  as  a  legal  tender,  their  power  grows  on  what  it  feeds.  Tiny  then 
proceed  to  destroy  the  $500,000,000  silver  dollars,  as  such,  and  to  res- 
urrect them  as  abstractors  of  gold  from  the  Treasury;  that  is  to  say, 
they  destroy  the  United  States  notes  in  order  to  save  the  country  from 
the  perils  of  having  $1,200,000,000  of  currency,  including  the  United 
States  notes  and  resting  upon  them.  In  turn  these  $346,000,000  rest 
upon  the  $100,000,000  of  gold  in  the  United  Stales  Treasury.  Then 
they  immediately  proceed  to  destroy  these  silver  dollars  as  such  and 
resurrect  them.  In  addition  to  the  paper  money  now  in  the  country, 
and  in  addition  to  the  bank  currency,  their  bill  will  call  for  from 
$200,000,000  to  $500,000,000  to  add  to  our  $1,200,000,000.  Adding  this 
$300,000,000  bank  currency  to  the  $500,000,000  silver  dollars,  and 
this  to  the  $1,200,000,000  paper  now  out,  makes  $2,000,000,000.  This 
82,000,000,000  is  to  rest  upon  the  $500,000,000  of  the  gold  redeemable 
silver  dollars,  and  these  silver  dollars  in  turn  rest  on  only  $25,000,000 
of  gold  in  the  Treasury. 

FINANCIAL   WISDOM  OF   THE   HILL-FOWLER   BILL. 

That  is  to  say,  we  now  have  $100,000,000  of  gold  in  the  United  States 
Treasury  to  redeem  $1,200,000,000  of  currency,  or  eight  and  one-third 
per  cent  of  gold  to  each  dollar  of  paper. 

The  Hill-Fowler  bill  proposes  to  add  from  two  to  four  hundred  millions 
in  bank  paper  and  our  $500,000,000  silver,  as  abstractors  of  gold  from 
the  Treasury,  and  rest  that  $2,000,000,000,  more  or  less,  ultimately  on 
$25,000,000  of  gold  in  the  Treasury,  or  one  and  one-quarter  per  cent 
of  gold  to  each  dollar  of  paper. 

Of  course  this  statement  will  surprise  the  authors  of  the  bill  more 
than  anyone  else  who  reads  it.  Their  bills  bear  no  internal  evidence 
of  any  section  of  them  having  been  brought  to  the  practical  test  of  be- 
ing carefully  "  worked  out"  by  trying  any  one  of  them  on  to  our  present 
system  as  modified  by  them,  while  every  section,  paragraph,  and  line 
of  the  Walker  bill  shows  it  to  have  been  subjected  to  that  test.  Should 
every  dollar  of  the  United  States  notes  be  destroyed  by  the  working  of 
the  Hill-Fowler  bill,  all  the  gold  would  then  be  released  from  the 
United  States  Treasury  except  $25,000,000,  which  is  set  aside  to  redeem 
$500,000,000  of  silver  dollars.  Is  it  wise  to  retire  $34C,000,000  United 
States  notes  and  $100,000,000  gold,  and  to  substitute  $500,000,000  in 
silver  and  $25,000,000  in  gold  in  their  identical  olticet 

BANKING  CONDITIONS   IN   RURAL   SECTIONS. 

At  this  point  the  question  will  naturally  be  asked  by  those  who  live 
in  sections  of  the  country  that  have  not  felt  the  hardship  of  the  pres- 
ent banking  law:  Why  is  there  any  need  of  amendments  to  relieve  the 
present  situation  other  than  to  ••reduce  the  tax  on  currency,"  and  to 


134  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

"allow  banks  to  issue  currency  to  the  par  of  bonds,"  and  to  "allow 
national  banks  with  as  little  as  $25,000  capital  in  places  of  4,000  people 
or  less,"  as  the  bankers  have  been  asking  to  have  done  for  twenty 
years? 

First,  under  the  present  law  banks  of  small  capital,  orof  .$100,000  capi- 
tal, for  that  matter,  can  not  exist  where  there  are  now  no  banking  facili- 
ties, and  the  throe  amendments  proposed  would  in  no  way  improve 
present  conditions,  so  as  to  permit  them  to  exist. 

On  the  other  band,  to  "repeal  half  the  taxes  on  circulation,"  and 
'•allow  banks  to  issue  currency  up  to  the  par  of  bonds,"  would  still 
further  reduce  interest  where  it  is  now  lowest  and  increase  interest 
where  interest  is  now  the  highest.  It  would  have  exactly  the  opposite 
effect  of  the  rational  amendment  of  the  law  provided  in  the  Walker 
bill,  viz.  to  halve  the  preseut  rates  in  strictly  country  districts  while 
not  materially  reducing  or  increasing  interest  rates  in  city  districts. 

INTEREST  DOUBLE  NORMAL  RATE. 

To-day  interest  on  bank  loans  in  country  districts  is  nearly  double 
the  normal  rate,  and  made  so  by  the  law,  while  they  are  at  the  same 
time  made  a  small  fraction  lower  to  borrowers  of  city  banks  by  the  law. 
Under  the  present  law,  the  normal  rate  of  interest  on  the  same  secur- 
ity on  the  same  time  and  on  the  same  amount  would  be  about  2.98+  per 
cent  in  the  three  central  reserve  cities,  were  no  interest  paid  on  deposits, 
as  compared  with  7.34  per  cent  in  country  districts,  and  these  relative 
rates  are  compelled  by  the  law;  that  is  to  say,  they  would  be  were  there 
any  strictly  country  banks,  but  there  is  not  one  strictly  "country  bank" 
today.  They  can  not  exist  under  the  law  as  it  stands.  Under  the 
Walker  bill,  with  the  currency  provided  therein,  the  rate  would  be  4.55 
per  cent  in  the  country  as  compared  with  2.98  per  cent  in  the  central 
reserve  cities. 

BANK  CAPITAL. 

Persons  will  hardly  put  their  capital  into  a  bank  unless  they  are 
reasonably  certain  of  receiving  6  per  cent  dividends  on  the  bank  stock, 
in  order  to  show  the  rates  of  interest  banks  must  charge  under  the 
present  law,  under  the  Hill-Fowler  bill,  and  under  the  Walker  bill  to 
pay  6  per  cent  on  the  bank  stock,  I  have  worked  out  the  following 
examples  of  the  practical  working  of  the  three  systems: 

In  the  case  of  No.  1,  formed  under  the  present  law,  a  country  bank 
would  be  compelled  to  charge  7.34  per  cent  on  its  loans  to  pay  6  per 
cent  dividends  on  its  stock,  or  1.31  percent  more  than  the  stockholders 
could  individually  loan  their  money  for  and  get  6  per  cent,  while  a  city 
bank  could  loan  for  2.98+  per  cent  and  pay  6  per  cent  dividends. 

In  the  case  of  No.  2  a  Hill-Fowler  bank  in  a  central  reserve  city  could 
pay  0  per  cent  dividends  on  its  stock  and  loan  money  at  3.03+  per  cent. 

Hut  it  is  shown  in  the  case  of  No.  3  that  a  Hill-Fowler  country  bank 
must  charge  0.0+  per  cent  to  pay  G  per  cent  on  its  stock.  A  rate  of 
interest  of  0  per  cent  would  not  make  it  an  object  to  form  a  bank. 

But  No.  4,  a  Walker  country  bank,  could  loan  money  at  4.55  per  cent 
and  pay  0  per  cent  dividends. 

N<>.  5  shows  a  central  reserve  city  bank  can  loan  money  at  2.98  per 
cent  or  at  less  rates  under  the  Walker  bill  than  under  the  Hill-Fowler 
bill. 


STRENGTHENING    THE    PUIJI.IC    CREDIT,   ETC.  135 

No.  1. 

PRESENT   LAW,    001   NTKY    BANK. 

Capital $150,  000.  00 

Deposits ."»7,  1  i.;.  nit 

Circulation,  00  per  cent  of  $37,500  bonds 33,  75o.  on 


Total 240,  893.  00 

Deductions: 

Paid  for  $37,500  bonds,  at  $113.55 $42,  581.25 

5  per  cent  redemption  paid  on  $33,750...       L, 687. 50 
15  per  cent  reserve  on $57,143 deposits...      8,571.  15 

20  per  cent  currency  not  in  circulation 6,  750.  00 

59,  590.  20 


Possible  loanable  funds 181,  302.  80 


Receipts: 

Interest  on  $42,581.45  paid  for  bonds,  at  2.4 per  cent. .  1 ,  021 .  95 

Interest  on  $181,302.80  loans,  at  7.34+  per  cent.  13. 315.  55 

Exchange  account 1, 000.  00 


Total 15,  337.  50 

Expenditures: 

Tax  on  circulation,  1  per  cent $337.  50 

Salaries,  etc G,  000.  00 

6  per  cent  dividend  on  $150,000  stock 9, 000.  00 

$15,337.50 

PRESENT   LAW,   CENTRAL  RESERVE    CITIES. 

Capital $150,  000.  00 

Deposits 050,  000.  00 


Total 800,  000.  00 

Deductions: 

United  States  bonds,  or 2.4  per  cent  capital, 

$3,000,  cost $4,  087.  80 

Reserve  required 162, 500. 00 

1 GG.  5S7.  80 


Possible  loanable  fuuds 633,  412.  20 


Eeceipts : 

Interest  on  cost  of  bonds  $4,087.80,  at  2.4  per  cent. . .  98.  1 1 

INTERESTON  $633,412.20  LOANS,  AT  2.08+  PER  CENT.  18,  901.  89 

Exchange  account 2,  000.  no 


Total 21,000.00 


Expenditures: 

Salaries,  etc $12,000.00 

6  per  cent  dividends  on  $150,000  stock. . .       9,  000.  00 


21,000.00 


136  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

Fo.2. 
HILL- FOWLER,    CENTRAL   RESERVE   CITY  BANK. 

Capital $150,000.00 

Deposits 050,000.00 

T,  ,tal 800,  000.  00 

Deductions: 

United  States  bonds  required,  equal  to  2.  4 
per  cent  of  capital,  or  $3,000;  market 
price,  8113.55 ;  cost  of  bonds  $4, 087. 80 

12.8  per  cent  of  capital,  or  $19,200  of 
United  States  notes  exchanged  for  ''re- 
serve note,"  $19,200,  and  5  per  cent  re- 
demption fund 900.  00 

Reserve  required 162, 500.  00 

167,547.80 

Possible  loanable  funds 632,  452.  20 

Receipts : 

^  per  cent  paid  on  reserve  notes  taken 96.  00 

Interest  on  cost  of  bonds,  $4,087.80,  at  2.4  per  cent. .  98. 11 

Interest  on  $632,452.20  loans,  at  3.03+  per  cent .  1 9, 180. 89 

Exchange  account 2, 000.  00 

Total 21,375.00 

Expenditures: 

Tax,  £  per  cent  on  $150,000  capital $375.  00 

Salaries,  etc 12, 000.  00 

6  per  cent  dividend  on  $150,000  stock 9,  000.  00 

21,375.00 

No.  3. 

HILL-FOWLER  COUNTRY  BANK. 

Capital $150,000.00 

1  deposits 57, 143.  00 

Circulation 150,  000.  00 

Total 357, 143. 00 

Deductions: 

5  per  cent  on  $60,000  "  reserve  notes" $3, 000.  00 

5  per  cent  on  $60,000  "  bank  notes" 3,  000.  00 

5  per  cent  on  $90,000  "currency  notes" ...     4,  500.  00 
Paid  for  40  per  cent  to  capital  bonds  re- 
quired, at  $113.55 68, 130.  00 

Reserve  required 8,  571.  00 

Redemption  fund  on  $90,000 1,  000.  00 

20  per  cent  currency  not  in  circulation 30,  000.  00 

118. 201.  00 

Possible  loanable  funds 238,  942.  00 


STRENGTHENING    THE    PUBLIC    CREDIT,   ETC.  L37 

Receipts: 

£  per  cent  paid  on  reserve  notes  taken $187. 60 

Interest  on  $68,130  paid  for  bonds,  at  2.4  per  eent 1,035.  L2 

Interest  on  $238,012  loans,  at  (5.0+  per  cot..  14,352.  38 

Exchange  account 1,  000.  00 

Total  17, 175.  00 

Expenditures: 

Tax  of  6  per  cent  on  $30,000  currency  notes .  $1,  800.  00 

Tax  of  £  per  cent  on  $150,000  capital 375.  00 

Salaries,  etc G,  000.  00 

6  per  cent  dividend  on  $150,000  stock .....     9, 000.  00 

17,175.00 

No.  4. 

"WALKER  COUNTRY  BANK. 

Capital 81 50.  000.  00 

Deposits r.7.  ]  I.;.  00 

Circulation 150,  000.  00 

Total 357, 143.  00 

Deductions: 

5  per  cent  redemption  fund,  $120,000  cur- 
rency in  actual  circulation $6,  000.  00 

15  per  cent  reserve  on  deposits 8,  571.  45 

20  per  cent  currencv  out  of  circulation 30,  000.  00 

44,571.45 

Possible  loanable  funds 312.  57 1 .  55 

Receipts: 

Interest  on  $312,571.55  loans,  at  4.55-1-  per  cent.      14, 2 10.  00 
Exchange  account 1 .  (too.  00 

Total 15,  240.  00 

Expenditures: 

Tax  on  $120,000  in  actual  circulation  0.2  per 

cent 2  10. 00 

Salaries,  etc C^  000.  00 

6  per  cent  dividends  on  $150,000  capital . .     9, 000.  00 

15,  210.  00 

No.  5. 

WALKER   CENTRAL   RESERVE   CITY   BANK. 

Capital $150, 000. 00 

Deposits 650,  000.  00 

Total  800.  000.  00 

Deductions: 

Reserve  required  25  per  cent  of  deposit 162,  500.  00 

Possible  loanable  funds o;;7.  500.  00 


138  STRENGTHENING    THE    PUBLIC    CREDIT,   ETC. 

Receipts: 

Interest  on  $(137,500  loans,  at  2.98—  per  cent  . .    $10, 000. 00 

Exchange  account 2, 000. 00 

Expenditures: 

Salaries,  etc $12:000.00 

6  per  cent  dividends  on  $150,000  stock ...       9, 000.  00 

21, 000.  00 

These  examples  of  six  banks  show  that  country  banks  can  be  formed 
under  the  Walker  bill  and  loan  money  at  half  to  two-thirds  the  rates 
of  interest  charged  by  banks  on  loans  at  the  present  time,  namely,  at 
4.55  per  cent.  They  show  also  that  the  interest  rates  by  county  banks 
formed  under  the  Hill-Fowler  bill  must  be  31  per  cent  higher  than 
under  the  Walker  bill. 

It  will  be  noticed  in  example  No.  2  of  a  Hill-Fowler  city  bank, 

that  the  "reserve"  required  in  cash  in  city  banks  is $102,  500 

The  ''reserve  notes"  the  city  bank  must  pay  for  in 
United  States  notes  are  about  one-half  what  the 
country  bank  must  buy,  or $19, 200 

The  gold  the  bank  must  have  in  its  own  vaults  is. . .     81, 250 

100, 450 


Balance 62, 050 

Thus  the  city  bank  can  keep  all  its  "reserve  notes"  in  its  own 

vaults  and  with  its  gold  still  use  any  lawful  money  for 62,  050 

It  would  not  be  possible  for  any  one  to  make  a  demand  upon  this 
city  bank  for  one  dollar  of  gold.  So  it  would  be  with  every  reserve 
city  bank  in  the  country  under  the  Hill-Fowler  bill. 

Take  example  No.  3  of  a  Hill-Fowler  country  bank  and  the  situation 
is  reversed.  It  will  be  seen  that  the  "reserve"  required  is  $8,571, 
while  the  bank  must  buy  double  the  "reserve  notes"  the  city  bank 
buys.  Only  two  fifths  of  this  reserve  is  required  to  be  in  cash ;  the  other 
three  fifths  may  be  in  amounts  due  the  bank  from  other  banks,  and  only 
one  fifth  or  $1,714.20  in  gold. 

It  figures  out  as  follows: 

The  " cash  reserve"  required  is $3, 428.  40 

$1,714.20  to  be  in  gold. 
The  "reserve  notes"  the  bank  must  pay  for  in 

United  States  notes  are $37, 500.  00 

The  gold  the  bank  must  have  in  its  own  vaults  is       1,  714.  20 

39,214.20 


Its  "reserve  notes"  in  excess  of  those  it  can  use  in  its  cash 

reserve  are 35,  785.  80 

It  will  also  be  observed  that  the  country  bank  must  invest  $68,130  in 
United  States  bonds  and  take  out  bank  notes  more  than  sixteen  times 
as  much  as  the  city  bank  with  the  same  capital.  The  city  bank  is  only 
required  to  invest  $4,087.80  in  bonds.  The  city  bank  will  not  bother 
with  any  currency.  It  cuts  no  figure  in  its  business.  But  the  country 
bank  must  pay  out  this  $35,785.80  "reserve  notes"  and  also  its  $37,500 
"bank  notes,"  a  total  of  $73,500.  This  paper  money  always  finds  its 
way  into  the  city  banks  to  be  by  them  exchanged  for  the  gold  of  the 
country  banks  in  redemption  and  then  returned  to  the  country  banks. 


STRENGTHENING    THE    PUBLIC   CREDIT,   ETC.  139 

The  Hill'Fowler  bill  forbids  the  massing  of  gold  to  scenic  in  com- 
bination the  maintenance  of  parity. 

The  Walker  bill  carefully  provides  for  massing  all  the  commercial 

gold  in  the  country  in  the  National   dealing  House   in    New  York  and 

also  in  San  Francisco  in  order  to  make  sine  the  maintenance  of  parity 
as  is  now  done  under  the  present  law.     Not  a  dollar  of  gold  can  he  bad 

to  day,  nor  for  thirty  years,  in  redemption  of  a  United  States  note, 
from  the  United  States  Treasury  in  Washington.  Only  in  New  York 
and  in  San  Francisco  can  it  lie  had.  Only  by  this  massing  of  gold  can 
parity  in  gold  redemption  lie  maintained. 

The  Hill  how  lei'  hill,  on  the  other  hand,  divides  the  gold  Into  driblets. 
In  hanks  of  $25,000  there  would  he  about  $285.71  in  gold  and  so  on  up. 
In  a  bank  of  $100,000  about  $1,142.86.  The  $25,000  country  hank  is 
expected  to  redeem  in  gold  over  its  own  counter  $26,250  paper  money 
with  $285.71  in  gold,  and  the  $100,000  country  hank  to  redeem  in  gold 
$lOf>. 000  of  its  paper  money  with  $1,142.86  in  gold  when  some  crank  or 
combination  of  panic-stricken  people  makes  a  raid  on  the  bank. 

The  Walker  bill  provides  for  massing  the  gold.  The  amount  the 
whole  10,000  banks  are  "required  to  keep"  is  from  $200,000,000  to 
$400,000,000,  in  order  to  make  the  maintenance  of  parity  absolutely 
secure,  and  leave  the  country  banks  to  redeem  the  currency  they  issue 
as  they  choose  in  any  kind  of  lawful  money. 

There  is  no  other  possible  way  of  safely  maintaining  parity  with  gold 
when  large  amounts  of  other  "lawful  money"  are  in  circulation.  Our 
whole  monetary  system  would  break  down  in  the  first  panic  under  the 
Hill-Fowler  bill,  and  the  Government  would  be  again  selling  bonds  for 
gold. 

NO  PROVISION   FOR   TRANSITION. 

Again,  there  is  no  provision  made  to  insure  safety  during  the  tran- 
sition, were  not  the  scheme  absurd.  The  first  country  bank  that  trans- 
fers from  the  present  system,  under  winch  the  United  States  Treasury 
maintains  the  parity,  to  the  Hill-Fowler  system,  where  the  banks  are 
to  maintain  parity,  will  have  to  support  with  its  $280  in  gold  the 
whole  §1,000,000,000  of  our  paper  money  or  stop  issuing  its  circulating 
notes.  But  they  say  no:  the  Treasury  will  still  do  it.  Of  course  it  will 
still  do  it;  but  because  it  will  always  have  to  maintain  parity,  as  now, 
the  Hill-Fowler  bill  is  not  worth  the  paper  it  is  written  on.  If  one 
bank  organized  under  the  bill  does  not  assume  the  obligation  to  relieve 
the  United  States  Treasurer  of  maintaining  parity,  will  two,  or  two 
hundred,  or  two  thousand,  or  ten  thousand?  Just  how  many  will  be 
required  to  organize  under  the  bill  to  remove  from  the  Treasury  the 
obligation  to  support  the  banks  as  to  parity  instead  of  the  banks  reliev- 
ing the  Treasury  of  maintaining  parity?  There  is  no  possibility  of  the 
banks  taking  upon  themselves  that  duty.  The  Treasury  conditions  are 
made  worse  by  it. 

Under  the  Walker  bill  not  a  bank  organized  under  it  assumes  the 
slightest  obligation  to  assume  the  maintenance  of  parity  and  thus  relic \  e 
the  United  States  Treasury  of  that  burden  until  a  certain  time  arrives. 
decided  on  by  the  Secretary  of  the  Treasury,  and  then  in  an  instant,  at 
a  signal  agreed  upon,  every  commercial  bank  in  the  country  is  in  the 
system  in  a  flash.  All  commercial  banks  are  instantly  united  to  main- 
tain "parity,"'  and  the  United  States  Treasury  is  as  thoroughly  relieved 
at  once  and  forever  from  all  responsibility  as  to  paper  money  or  coin 
money,  other  than  police  supervision,  as  is  Smith,  Brown,  or  any  other 
citizen. 


140  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

DEFICIENCY  IN  BANK  FUNDS. 

Very  carefully  prepared  tables  are  published  in  the  appendix  to  this 
report  which  show  that  the  total  actual  capital  of  both  State  and 
national  commercial  banks  is  about  $1,400,000,000,  that  the  actual  cash 
reserve  held  by  them  is  $560,000,000,  and  the  total  reserve  held  by  those 
banks  is  about  $1,000,000,000. 

All  of  these  banks  would  be  brought  into  the  national  system  under 
the  Walker  bill. 

They  also  show  that  the  deficiency  in  1897  in  national-banking  funds 
in  the  nine  Southern  agricultural  States  in  which  banks  were  well 
developed  in  1800,  is  about  $284,000,000 —  in  those  nine  States  alone. 
It  is  safe  to  assume  that  had  national  banking  been  as  free  in  these 
States — Alabama,  Georgia,  Kentucky,  Louisiana,  Missouri,  North 
Carolina,  South  Carolina,  Tennessee,  and  Virginia — as  in  1860,  the 
national-banking  funds  now  in  use  there,  in  excess  of  what  they  are, 
would  have  amounted  to  $371,000,000,  and  would  be  divided  as  follows: 

As  the  masses  of  the  people  in  the  South  during  the  slave  period 
used  comparatively  little  currency,  checks  and  drafts  were  employed 
out  of  all  proportion  to  their  use  in  the  Middle  States  where  slavery 
did  not  exist.  The  banking  funds  of  the  Middle  States  were,  capital  42 
per  cent,  deposits  16  per  cent,  and  currency  42  per  cent.  Resolving 
the  $370,933,761,  estimated  deficiency  in  banking  funds  in  the  above 
nine  States,  into  the  component  parts  of  capital,  deposits,  and  currency, 
the  probable  increase  in  each  is  shown: 

Probable  increase  in  capital $155,  792,  680 

Probable  increase  in  deposits 59,  348,  401 

Probable  increase  in  currency 155,  792,  680 

AGRICULTURAL   STATES. 

Taking  the  fifteen  additional  agricultural  States  that  supported  cheap 
money  in  1896 — Arkansas,  California,  Colorado,  Florida,  Idaho,  Kansas, 
Mississippi,  Montana,  Nebraska,  Nevada,  Texas,  Utah,  Washington, 
Wyoming — the  deficiency  in  banking  funds  would  be  fully  $500,000,000. 

Under  the  Hill- Fowler  bill  the  improved  conditions  for  establishing 
banks  are  of  such  a  trivial  character  that  no  perceptible  increase  in 
banks  could  be  made,  while  under  the  Walker  bill  the  chances  of 
improvement,  based  upon  the  banking  conditions  existing  in  1860,  would 
be  such  that,  in  a  brief  period,  banks  would  be  established  using  addi- 
tional capital,  deposits,  and  currency  to  the  amount  indicated. 

Of  course  the  statement  is  made  that  this  banking  capital  does  not 
exist  and  can  not  be  had  at  the  South  and  in  the  other  agricultural 
States,  because  of  a  lack  of  personal  propeity  in  those  States.  This 
has  not  the  slightest  foundation  in  fact.  There  is  not  a  single  economic 
fict  to  justify  that  statement.  Deducting  the  value  of  the  slaves,  the 
assessed  value  of  personal  propeity  per  capita  in  1860  was  $85.78;  in 
L890  it  was  $85.44.  It  is  thought  by  conservative  men — students  of 
economic  conditions  of  the  South— that  since  1S90  the  personal  property 
lias  increased  certainly  one-quarter,  and  some  put  it  much  higher.  It 
is  thought  that  the  personal  property  per  capita  in  1900,  in  the  Southern 
States  named,  will  reach  $125, or  more.  At  any  rate,  what  we  know  of 
the  personal  property  in  the  South  gives  no  justification  for  the  state- 
ment that  the  lack  of  banking  funds  at  the  South  is  due  to  the  poverty 
of  the  people  there  to-day,  as  compared  with  that  of  1860,  but  rather  it 
is  due  wholly  to  the  oppressive  national  banking  law. 


STRENGTHENING  THE  PUBLIC  CREDIT,  ETC.        141 
CITY  BANK  FUNDS. 

The  population  of  cities  in  the  United  States  having  10,000  people  or 
more  is  20,781,474.  The  total  banking  fnnda  of  those  Mime  cities  are 
$2,283,320,423.  Assuming  thai  the  banking  funds  in  those  cities  serve 
half  as  many  again  people  as  live  in  those  cities,  it  would  bring  the 
number  of  people  served  by  that  banking  capital  up  to  31,172,21 1,  ami 
would  give  sT.'!.L'o  per  capita. 

Places  in  the  country  of  less  than  10.000  people  have  a  population  of 
41,840,776.  Deduct  from  that  population  10,390,737  served  by  the  city 
banks,  and  it  leaves 31,450,039  to  be  served  by  the  banks  in  the  places 
of  less  than  10,000  people,  or  $23.38  banking  funds,  or  one  third  as 
much  per  capita. 

CITY  BANKS   CAN   NOT   ISSUE   CURRENCY. 

The  fact  that  the  business  of  the  city  bank  is  such  that  it  can  not 
issue  to  a  profit  currency  notes  where  currency  is  issued  on  the  true 
banking  principle,  can  not  be  too  persistently  insisted  upon.  Where 
currency  is  redeemed  in  the  natural  way  by  a  city  bank,  it  goes  into 
the  city  clearing  house  the  next  morning  with  checks,  drafts,  and  bills 
of  exchange  against  the  bank,  and  in  a  city  where  business  is  done  by 
checks  and  drafts,  and  but  a  very  small  percentage  of  currency  is  nxd 
in  proportion  to  the  business  done,  the  bank  has  no  possible  way  of 
keeping  currency  in  circulation.  The  only  reason  they  have  been  able 
to  do  so  in  the  last  thirty  years  is  because  no  genuine  country  banks 
could  exist  under  the  national  banking  law,  and  therefore  compara- 
tively no  currency  was  issued  in  the  country,  and  the  city  banks  occu- 
pied with  their  currency  the  country  districts,  the  country  districts 
paving  interest  on  what  they  should  have  had  for  nothing. 

This  state  of  things  would  end  at  once  under  the  Walker  bill. 

NEW  YORK   CITY  BANKS   IN  18G0. 

All  the  banks  in  New  York  in  185G  only  issued  15  per  cent  of  cur- 
rency to  their  capital.  It  ran  down  to  11.42  per  cent  in  I860,  and  that 
currency  was  issued  by  those  banks  that  had  a  country  business, 
although  located  in  the  city.  The  Bank  of  Commerce,  with  a  capital  of 
$0,000,000,  had  a  circulation  of  only  $2,000,  one-tenth  of  1  per  cent  of  its 
capital.  The  City  Bank,  with  $1,000,000  capital,  $2,000,000  deposits, 
issued  no  currency,  while  the  East  Kiver  Bank,  whose  name  indicates 
the  business  of  its  patrons  as  with  stevedores  and  with  people  who 
come  into  the  city  with  boats,  issued  only  40  per  cent  to  its  capital. 

CHICAGO   BANKS. 

The  Chicago  banks  have  only  2.5  per  cent  of  circulation  to  their 
capital.  They  hold  United  States  bonds  to  an  amount  entitling  them 
to  take  out  $1,215,000  in  circulation  and  have  taken  out  only  9616,365, 
of  so  little  value  is  currency  to  city  banks.  If  all  the  banks  in  Chicago 
were  not  forced  to  buy  bonds  as  a  license  fee  to  do  business  probably 
not  a  dollar  in  currency  would  have  been  taken  out. 

INJUSTICE   OF  6  PER   CENT   TAX   ON  20   PER   CENT  OF   CURRENCY. 

The  Hill-Fowler  bill  exhibits  the  result  of  minds  exceedingly  fertile 
in  devising  ways  for  depriving  country  sections  of  banking  facilities, 


142 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 


one  of  which  is  to  tax  currency  issued  in  excess  of  80  per   cent  to 
capital. 

A.8  deposits  to  a  city  bank  are  to  it  what  currency  is  to  a  country 
bank,  if  the  currency  in  excess  of  80  per  cent  to  capital  is  to  be  taxed 
6  per  cent,  then  deposits  in  a  bank  in  excess  of  80  per  cent  to  capital 
should  be  taxed  at  the  rate  of  G  per  cent  per  annum  to  make  the  condi- 
tions between  city  banks  doing-  business  by  city  methods  and  country 
banks  doing  business  by  country  methods  equal. 

Capital,  surplus,  and  other  profits  in  national  hauls  in  the  central  reserve 
cities  o/Neto  York,  Chicago,  and  tit.  Louis,  October  5,  1697. 


Capital,  surplus,  and  profits 

$149,  796,  620 

$045,  633,  469 
119,  837,  296 

Aggregate  deposits 

The  Hill-Fowler  bill  exempts  currency 
from  taxation  to  an  amount  equal  to 
80  per  cent  of  capital 

Excess  of  deposits  over  80  per  cent  of 
capital 

525  796  173 

Six  per  cent  of  deposits  in  excess  of  80 
per  cent  of  capital— tax  would  be 

31,  547.  770 

Newly  formed  country  banks,  of  $150,000  paid-in  capital  or  less, 
aggregating  $150,000,000  in  capital,  immediately  upon  getting  into  full 
operation,  the  items  of  their  funds,  taking  the  proportions  of  capital, 
deposits,  and  circulation  from  the  condition  of  the  banks  in  the  Middle 
States  in  1860,  would  run  as  follows: 


Capital  paid  in 

Deposits 

Circulation 


Currency  to  80  per  cent  of  capital 

Excess  of  currency  over  80  per  cent  to 
capital 


Tax  of  6  per  cent  on  excess  currency 
would  amount  to 


$120, 000,  000 
30,  000,  000 


$150,  000,  000 

57, 143,  000 

150,  000,  000 


150,  000, 000 


1,  800,  000 


The  tax  of  $31,547,770  on  the  city  banks  would  be  as  onerous  and 
unjust  to  them  and  no  more  so  than  the  tax  of  $1,800,000  to  the  coun- 
try banks  on  any  part  of  their  currency,  for  currency  is  to  country 
banks  what  deposits  are  to  city  banks. 

SAFETY   OF   BANKS  ISSUING  CURRENCY. 

The  safety  of  country  banks  issuing  a  large  percentage  of  currency 
to  their  capita]  is  questioned  by  the  framers  of  the  Mill-Fowler  bill,  but 
upon  examinatioE  it  will  bo  found  they  are  much  safer  than  city  banks 
with  enormous  deposit  accounts.  A  comparison  of  example  No.  2  with 
No.  4  will  make  the  matter  clear. 


STRENGTHENING    THE    PUBLIC    CREDIT,   ETC.  L43 

CITY    BANK,   NO.    2. 
K(*s(  >nr(*os  t 

Redemption  fund »60.  00 

United  States  bonds 4,087.80 

Reserve  held 162,  500.  00 

Loans 632,  452.  20 

Total 800,  (too.  00 

Liabilities: 

Capital 150,  000.  oo 

Deposits  C">(i,  000.  00 

Total  sot),  000.  00 

(Paid-in  capital,  $76,700.) 
One-half  of  loans  prove  a  total  loss  and  the  half  collected 

amount  to 316,  226.  10 

Bedemption  fund,  United  States  bonds  and  reserve 167,  547.  80 

Total  assets 483,  773.  00 

Owe  depositors 650, 000. 00 

Without  stock  assessment  depositors  lose 166,  226.  10 

Collect  the  full  assessment  on  the  "  paid-in"  stock 70,  700.  00 

The  depositors  still  lose  13.1— per  cent 89,  520.  10 

COUNTRY  BANK,  NO.  4. 

Resources : 

Redemption  fund $0,  000.  00 

Reserve  held 8, 571. 45 

Loans 31U,  571.  55 

Total 327, 143.  00 

Liabilities: 

Capital 150.  iKio.  oo 

Deposits 57, 143. 00 

Currency  in  circulation 120.  000.  00 

Total 327, 143.  00 

One-half  of  loans  prove  a  total  loss  and  the  amount  col- 
lected is 156,  285.  77 

Redemption  fund  and  reserve 14,571.45 

Total  assets 1  To.  857.  22 

Pay  holders  of  currency 120,  000.  00 

Balance  remaining 50,  857.  22 

Due  depositors 57.1  13.  00 

1  tendency 6,  285.  78 

Stockholders  assessment  4.2— per  cent 6,  285.  -  8 


144  STRENGTHENING    THE    PUBLIC    CREDIT,   ETC. 

In  the  case  of  the  city  bank  the  depositors  lose  13.1  per  cent  of 
their  deposits  and  the  stockholders  lose  all  their  capital  and  are  also 
assessed  100  per  cent  on  the  amount  of  it,  aud  in  the  case  of  the  county 
bank  no  one  loses  a  dollar,  but  the  stockholders  lose  all  their  capital 
and  are  assessed  about  4  per  cent  on  the  amount  of  their  capital. 

FAILURES   OF   COUNTY  BANKS. 

During  thirty-three  years,  banks  of  $50,000  capital  have  failed  for 
$8,000,000  and  paid  51  per  cent  dividends. 

Banks  with  capital  to  above  850,000  and  8100.000  capital  or  less  have 
failed  for  $17,000,000  and  paid  57  per  cent  dividends. 

Banks  of  over  $100,000  and  $200,000  capital  or  less  have  failed  for 
$10,000,000  and  paid  lil  per  cent  dividends. 

Banks  of  over  $200,000  and  of  $300,000  capital  or  less  have  failed 
for  $18,000,000  and  have  paid  03  per  cent  dividends. 

Banks  of  over  $300,000  and  of  $500,000  capital  or  less  have  failed  for 
$29,000,000,  and  have  paid  64  per  cent  dividends. 

Banks  of  over  $500,000  capital  have  failed  for  $33,000,000  and  paid 
00  per  cent  dividends. 

These  figures  show  there  is  no  material  difference  in  the  dividends 
paid  by  the  different  classes  of  banks.  Under  the  supervision  provided 
in  the  Walker  bill  not  one  small  bank  would  probably  fail  where  three 
have  failed  under  the  law  as  it  now  is. 

LOW  RATES   OF   INTEREST. 

A  low  rate  of  interest  all  over  the  country,  as  in  other  countries,  is  not 
possible  with  separate,  isolated,  unsupported,  and  antagonistic  bond 
currency  banks,  such  as  the  Hill-Fowler  bill  provides.  Solitary  banks 
in  any  country  make  interest  rates  abnormally  high  in  the  agricultural 
portions  of  it,  or  even  by  combining  them  under  the  bond  currency  pro- 
vision of  the  present  law,  with  its  prohibition  of  "  true  bank  currency  n 
or  under  the  Hill-Fowler  bill,  which  perpetuates  the  embargo  on  banks 
and  "true paper  money"  to  country  districts  and  keeps  up  interest. 

When  the  Government  issues  paper  money  directly  or  robs  the  citi- 
zens of  the  capital  they  get  together  to  form  a  bank  and  before  the  bank 
is  allowed  to  issue  currency,  by  compelling  the  bank  to  buy  bonds  to 
the  amount  of  the  paper  money  it  issues,  it  makes  it  impossible  for  a 
bank  to  live  in  country  districts,  because  to  issue  paper  money  by  a 
country  bank  is  the  same  to  it  as  accepting  deposits  is  to  a  city  bank. 

]STo  one  thing  can  be  suggested  that  collects  such  an  enormous  tax; 
from  the  people  in  country  districts  in  favor  of  cities.  It  ruins  enter- 
prise in  the  country  and  drives  small  manufacturing  into  cities. 

How  our  national  banking  law  cruelly  robs  and  cruelly  oppresses 
agricultural  States  can  only  be  known  by  the  most  careful  and  pains- 
taking investigation. 

In  so  far  as  this  prevails  it  puts  the  country  at  a  tremendous  disad- 
vantage and  out  of  touch  with  cities. 

THE   OFFICE   OF   BANKING. 

The  existence  and  whole  office  of  banking  and  the  use  of  paper 
money  is  of  civilized  society  and  a  contrivance  to  substitute  the  use  of 
"credit  paper  obligations,"  which  cost  the  people  nothing  in  exchanging 
products  for  coin  in  the  exchange  of  products,  which  costs  6  per  cent 
per  annum  on  all  coin  used.     Using  paper  money  reduces  the  neces- 


STRENGTHENING  THE  PUBLIC  CREDIT,  ETC.        145 

sity  for  coin  to  the  lowest  practical  point,  and  this  economizes  expense 
by  using  only  so  much  coin  as  it  is  accessary  to  use,  thus  reducing 
expense  in  exchanging  products  to  the  lowest  practical  point. 

Banks  and  paper  money  are  as  necessary  to  modern  civilization,  in 
the  transfer  from  man  to  man  of  the  titles  to  products,  as  railways, 

steamships,  canals,  etc.,  are  to  the  transfer  of  products  themsel  768  from 
place  to  place.  Banks  and  paper  money  are  only  used  to  transfer  the 
titles  to  these  products.  Any  hindrance  to  or  increased  cost  in  the  u 
of  paper  money,  or  of  hanks,  by  compelling  an  unnecessary  amount  of 
coin  to  be  used,  or  by  imposing  taxes  on  paper  money,  works  as  much 
and  even  a  greater  injury  to  a  community  than  a  hindrance  to  or 
increased  cost  of  the  transportation  of  products.  The  small  use  of  coin, 
in  proportion  to  the  use  of  banks  and  currency,  by  any  people,  is  the 
Bure  evidence  of  its  attainment  in  integrity,  ability,  acuteness — in  tact, in 
civilization.  Coin  to  banks  and  currency,  in  transferring  titles  to  prod- 
nets  from  man  to  man,  is  as  crude  as  to  use  the  back  of  man  and  of  the 
donkey,  instead  of  the  railways  and  the  steamship,  to  transport  pro- 
ducts from  place  to  place. 

RIGHT   OF  THE   PEOPLE   TO  FREELY  USE  WRITTEN  OBLIGATIONS  TO 

PAY. 

At  the  very  foundation  of  the  right  of  men  to  life,  liberty,  and  the 
pursuit  of  happiness  lies  the  right  of  men  to  take  and  to  give  verbal 
and  written  "obligations  to  pay,"  to  be  satisfied  on  demand  in  the 
future. 

To  make  it  wholly  impossible  for  men  to  exercise  this  right  would 
relegate  the  race  to  barbarism.  The  right  of  man  to  unite  with  his 
fellows  to  give  their  joint  obligation  as  a  corporate  person,  to  be  jointly 
satisfied  by  them  on  demand,  has  become  an  inextricable  part  of  and  is 
fundamental  to  the  continued  progress  of  modern  civilization. 

The  freely  uniting  of  a  certain  amount  of  capital  of  live  or  more  men 
and  the  uniting  of  those  men  into  a  corporate  person,  now  called  a  bank, 
and  to  continue  to  them  the  right  to  give  and  to  take  "obligations  pay- 
able on  demand,"  has  come  to  be  recognized  as  a  "right"  of  the  citizen, 
little  less  sacred  than  the  right  of  the  "sole  person"  to  do  the  same 
thing. 

In  the  national-bank  act  the  Government  absolutely  overrides  this 
great  and  fundamental  right  of  the  citizens  of  this  country  and  con- 
fiscates to  its  use  capital  collected  by  our  citizens  without  the  aggre- 
gating of  which  "exchanges  of  products"  can  not  be  made.  This  pro- 
ceeding is  never  justifiably  resorted  to  excepting  in  case  of  war,  and 
this  is  the  only  modern  nation  that  has  continued  or  made  such  a  forced 
war  loan  during  peace. 

COMPARISON  OF  THE  PRESENT  LAW  AND  WALKER  BILL. 

The  following  in  a  rough  way  still  further  illustrates  the  workings  of 
a  small  bank  under  the  present  law  and  a  bank  under  the  Walker  bill, 
leaving  out  the  confusing  elements  of  the  previous  examples: 

The  present  law  bank  has  a  capital  of 81 00,  000 

Buys  of  United  States  bonds 50, 000 

Has  left  of  its  capital "'<>.  000 

Gets  of  circulating  notes 50.  000 

Has  to  loan 100, 000 

b  &  c 10 


146        STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 

It  then  discounts  notes  running  four  months  for  $2,000  for  $40  dis- 
count each  for  50  men.  Bach  man  takes  a  draft  on  New  York,  where 
he  owes  $1,000,  for  the  61.000  to  pay  his  debt,  and  takes  circulating 
notes  for  $  1 ,000  to  use  in  his  neighborhood.  This  aggregates  $100,000, 
all  the  bank  has  to  loan. 

The  bank  must  get  interest  at  the  rate  of  G  per  cent  per  annum  on 
the  fifty  notes  it  discounts  to  pay  0  per  cent  dividends  on  its  stock. 

The  Walker  bank  has  a  capital  of $100, 000 

It  issues  its  own  circulating  notes  to  the  amount  of 100,  000 

Has  to  loan 200,000 

It  then  discounts  the  notes  running  four  months  of  $2,000  each  for 
$20  each  (for  double  the  number  or)  for  100  men.  Each  man  takes  a 
draft  on  New  York  for  $1,000  to  pay  what  he  owes  in  New  York,  and 
the  circulating  notes  issued  by  the  bank  for  $1,000  to  use  among  his 
neighbors.    This  aggregates  $200,000,  all  the  bank  has  to  loan. 

The  bank  only  needs  to  get  interest  at  the  rate  of  3  per  cent  per 
annum  on  the  100  personal  notes  it  discounts  to  pay  G  per  cent  on  its 
stock. 

The  premium  on  the  United  States  bonds,  taxes,  sinking  fund,  etc., 
are  so  much  that  no  money  can  be  made  on  currency  taken  out  on  bonds. 

The  Walker  bank  does  the  equivalent  of  this,  viz,  it  charges  6  per 
cent  on  the  amount  of  its  own  capital  it  loans  to  the  farmer  on  his 
$2,000  note,  say,  $20  on  the  $1,000;  and  on  the  other  $1,000  it  charges 
no  interest,  but  exchanges  its  own  circulating  notes  for  the  four  month 
note  of  the  farmer  in  consideration  of  the  $20  the  farmer  paid  him  on 
the  whole  loan. 

If  the  Government  issued  all  the  paper  money  we  used,  and  all  the 
coin  money,  and  no  checks  or  drafts  were  used,  interest  would  have  to 
be  from  one  half  more  to  double  what  it  would  be  were  we  to  use  no 
Government  paper  money  and  as  little  coin  money  as  we  can  get  along 
with,  but  used  instead  all  the  "bank  paper  money  "  the  people  were  will- 
ing to  use,  that  the  banks  could  keep  at  par  with  coin. 

Under  the  Walker  bill  interest  would  not  be  materially  higher  or 
lower  in  cities,  so  little  paper  money  can  be  used  in  cities.  City  busi- 
ness is  mostly  done  with  checks  and  drafts.  Country  people  can  not 
use  checks  and  drafts  to  any  great  extent.  They  can  only  use  "bank 
circulating  notes"  currency,  which  is  to  them  the  same  as  transferable 
certificates  of  deposits.  The  longer  banks  exist  in  a  town,  the  more 
checks  and  drafts  are  used.  Bank  notes  are  the  "deposits"  of  the 
farmer  in  the  banks  as  technical  "deposits"  are  such  to  the  city 
merchant. 

Under  the  Walker  bill  3,000  country  banks  would  soon  be  established 
where  there  are  no  banks  now.  The  farmers  can  scarcely  borrow  a  dol- 
lar now,  in  many  sections  of  the  country,  on  their  crops  of  hogs,  corn, 
wheat,  cotton,  hay,  etc.,  soon  to  be  marketed.  They  could  borrow 
money  of  Walker  banks  for  half  what  it  could  be  borrowed  for  now  of 
banks  under  the  present  law,  could  such  banks  be  established  under 
the  present  law,  which  is  not  possible. 

ISSUE  OF  PAPER  MONEY  BY  GOVERNMENT  AND  BY  BANKS. 

When  the  Government  issues  the  money,  greenbacks,  Treasury  notes, 
etc.,  or  requires  a  bank  to  buy  bonds  to  get  it,  a  bank  can  only  get  it 
by  parting  with  an  amount  of  capital  equal  to  the  amount  of  such 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  L47 

money  it  gets  into  its  vaults.  The  rates  of  interest  arc  not,  reduced  to 
the  people  by  the  use  of  Government  money,  whether  it  be  paper  money, 
silver  money,  or  gold  money. 

When  all  banks  issue  their  own  paper  money,  as  under  the  Walker 
bill,  and  any  live  reputable  citizens  can  make  a  bank  in  such  a  way  that 
the  Government  can  compel  the  banks  themselves  to  keep  this  paper 
money  at  par  with  silver  dollars  and  gold  dollars,  competition  amoug 
banks  will  make  interest  charged  by  these  country  banks  that  make 
this  money  as  much  lower  than  when  they  use  Government  currency  as 
the  amount  of  this  paper  money  they  use  bears  to  the  total  amount  of 
the  loans  of  these  banks.  That  is  to  say,  from  one-third  to  one  half 
lower  rates  of  interest,  after  deducting  what  it  costs  the  banks  to  keep 
their  paper  money  at  par  with  silver  dollars  and  gold  dollars,  which  is 
only  a  trifle. 

When  banks  issue  their  own  circulating  notes  the  bank  gets  current 
rates  of  interest  on  all  of  its  notes  that  are  out  of  its  possession  and  is 
compelled  by  competition  thereby  to  charge  lower  rates  of  interest. 
The  amount  of  such  total  lessened  interest  is  the  interest  earned  by  its 
notes  when  out.  When  such  notes  are  in  its  own  vaults  it  is  losing 
nothing  by  having  them,  for  they  cost  nothing. 

When  the  Government  issues  all  money,  say  greenbacks,  Treasury 
notes,  etc.,  or  silver  dollars  and  gold  dollars,  the  total  interest  on 
money  loaned  by  banks  that  they  are  compelled  to  charge  all  custom- 
ers is  as  much  more  than  under  the  Walker  bill  as  current  rates  of 
interest  on  the  whole  amount  of  such  money.  A  bank  can  only  get 
Government  moneys  by  having  its  capital  depleted  by  every  dollar  it 
has  of  it  in  its  vaults.  Therefore  the  current  rate  of  interest  on  it  is 
lost  while  it  is  idle  in  the  bank.  The  only  way  the  bank  can  stop  loss 
of  interest  on  it  is  by  "unloading  it"  on  other  banks  or  on  the 
borrowers  of  the  bank.  When  the  borrower  has  it  the  bank  is  making 
no  profit  on  it  to  enable  it  to  reduce  interest  rates  to  the  farmer.  This 
is  why  more  and  more  money  is  being  used  by  clearing  houses  in  paying 
balances. 

WALKER  BILL  CONFORMS  TO  THE  SUFFOLK  SYSTEM. 

The  Walker  bill  conforms  to  the  old  Suffolk  system  of  New  England 

from  1840  to  1804  in  issuing  currency  by  banks  and  to  that  of  all  other 

countries  except  the  United  States. 
The  truth  of  the  statement  made  is  shown  by  trying  our  system  by 

the  facts. 

We  have  an  excessive  amount  of  coin — certainly  from 
$41)0,000,000  to  $800,000,000  more  than  there  is  any 
economic  demand  for — but  putting  it  at  the  lowest 
amount  there  is  an  excessive  amount  of  coin  of $  100,  000,  000 

We  have  paper  money  earning  the  banks  nothing 1, 100,  Olio.  000 

Total 1, 500, 000,  000 

Interest  on  national-bank  loans  is  necessarily  higher  than  normal, 
provided  our  paper  money  \vas  "true  bank  currency"  issued  against  the 
assets  of  the  bank  as  paper  money  is  issued  in  every  other  country,  as 
$1,500,000,000  plus  ai',000,000,000  loans  =  $3,500,000,000  is  to  $1,500,- 
000,000,  or  42.8  per  cent.  This  shows  that  with  the  banks  issuing 
currency  and  submitting  the  volume  of  coin  to  economic  laws  inter- 
est rates  would  be  reduced  from  6  to  3.43  per  cent.  This  considers  only 
national  banks. 


148 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 


Adding  the  $700,000,000  loans  of  State  banks  it  makes  $4,200,000,000 
to  $1,500,000,000  earning  no  income.  Including  these  the  rate  of  inter- 
est  would  be  reduced  35.7  per  cent,  or  from  6  to  3.80  per  cent. 

Of  course  this  is  only  approximately  correct,  as  no  account  is  taken 
of  "current  redemption"  and  expenses  of  many  kinds,  or  of  the  sums 
of  paper  money  not  in  circulation,  but  these  do  not  very  materially  affect 
the  result.  It  still  remains  that  by  enacting  the  Walker  bill,  interest 
rates  would  be  reduced  in  approximately  the  proportion  indicated,  and 
almost  wholly  in  country  districts. 

LOANS  TO  CAPITAL  AND  DEPOSITS. 

That  the  results  shown  in  the  six  examples  of  banks  under  the  pres- 
ent law.  under  the  Hill-Fowler  bill,  and  under  the  Suffolk  system  of 
the  Walker  bill  are  substantially  correct  is  proven  by  the  actual  expe- 
rience of  banks  in  the  total  loans  by  banks  in  proportion  to  their  total 
capital  and  deposits  in  1896  as  compared  with  1850.  There  are  only 
two  sources  of  loanable  "funds"  to  a  bank  when  it  can  not  issue  its 
own  currency  against  its  assets,  viz,  capital  and  deposits.  There  are 
three  sources  of  loanable  "funds"  to  a  bank  that  can  issue  its  own 
currency  against  its  assets,  viz,  capital,  deposits,  and  currency.  All 
banks  before  1801  freely  issued  currency  against  their  assets  with  like 
results  of  low  interest  rates  in  all  the  States. 

I  give  only  a  few  samples: 


Maine  loaned  to  capital  and  deposits 

Vermont  loaned  to  capital  and  deposits 

New  York,  outside  of  New  York  City,  loaned  to  capital 

and  deposits 

The  six  New  England  States,  including  Boston,  loaned 

to  capital  and  deposits 

North  Carolina  loaned  to  capital  and  deposits 


1856. 


Per  cent. 
130 
157 


166 

125 
162 


This  is  the  inevitable  result  in  all  agricultural  sections  when  a  bank 
can  issue  its  own  currency.  This  shows  that  money  can  be  borrowed 
at  one  third  to  one-half  lower  rates  when  banks  can  issue  currency  as 
provided  in  the  Walker  bill. 

On  the  other  hand,  the  advantage  given  cities  under  the  national 
banking  law  and  under  the  Hill-Fowler  bill,  in  oppression  of  farming 
districts,  is  conclusively  proved  by  the  fact  that  while  New  York  City 
could  loan  only  88  per  cent  to  her  capital  and  deposits  in  1856,  she  loaned 
97  per  cent  in  1890, 10  per  cent  more  in  1896  than  in  1856;  while  Maine 
loaned  35  per  cent  less,  Vermont,  99  per  cent  less;  New  York  State 
outside  New  York  City,  113  per  cent  less;  North  Carolina,  85  per  cent 
less;  and  the  six  New  England  States,  including  the  city  of  Boston, 
43  per  cent  less  than  in  1856. 

Notwithstanding  these  facts,  which  were  before  them  when  the  Hill- 1 
Fowler  bill  was  compiled,  they  propose  to  continue  their  oppression  of 
the  farming  communities  with  little  or  no  relief  for  four  years,  and  then 
dribble  out  relief  for  four  years  more,  were  their  bill  workable,  which 
it  is  not, 


STRENGTHENING    THE    PUBLIC    CREDIT,   ETC.  149 

HOW  MUCH   CURRENCY   SUFFOLK-SYSTEM  BANKS   ISSUED. 

No  better  banking  system  ever  has  been  seen  than  that  of  New 
England  from  18-40  to  1804,  known  as  the  "Suffolk  system."  It  was 
precisely  what  is  proposed  for  the  whole  country  in  the  Walker  bill. 
The  specie  held  was  13  per  cent  to  currency  issued,  and  8  per  cent  to 
currency  and  deposits. 

Provisions  in  the  various  States  were  as  follows: 

IN   MAINE. 

Banks  not  to  issue  currency  in  excess  of  their  capital  paid  in,  plus 
the  specie  in  their  vaults.    Specie  deposited  in  Suffolk  Bank,  Boston, 

to  be  counted  as  in  their  own  vaults.  Penalty  tax  of  U4  per  cent  per 
annum  on  all  currency  in  circulation  during  suspension  of  specie 
payments. 

NEW  HAMPSHIRE. 

Nearly  the  same  as  Maine. 

VERMONT. 

Banks  may  issue  currency  to  an  amount  double  that  of  their  capital. 
Penalty  tax  for  suspension  of  specie  payments  of  12  per  cent  per  annum 
on  currency  in  circulation.  Penalty  tax  of  1  per  cent  per  annum  on 
capital  if  bank  fails  to  redeem  its  notes  either  in  Boston  or  New  York. 
Failure  to  redeem  in  one  or  the  other  of  the  cities  for  ten  days  incurs 
tax  for  the  whole  year. 

MASSACHUSETTS. 

Substantially  the  same  as  Maine  and  New  Hampshire. 

RHODE   ISLAND.  * 

Substantially  the  same  as  Massachusetts. 

CONNECTICUT. 

May  issue  currency  to  amount  of  capital — must  keep  specie  equal  to 
10  per  cent  of  deposits  and  currency  in  circulation.  Deposits  of  funds 
in  a  New  York  or  Boston  bank  to  be  counted  as  specie  against  deposits 
and  currency,  when  the  currency  is  redeemed  in  Boston  or  New  Voile. 

It  will  be  seen  that  the  provisions  of  the  Walker  bill  are  substan- 
tially the  same  as  these. 

The  Walker  bill  penalty  tax  for  failure  to  maintain  "parity"  is  one- 
half  of  1  per  cent  per  annum  imposed  on  deposits  in  order  to  make 
the  penalty  fall  equally  on  all  banks.  It  is  on  deposits  especially  that 
specie  should  be  maintained.  It  is  depositors,  not  holders  of  currency, 
who  ship  specie  abroad  and  who  demand  gold.  If  the  penalty  tax  is 
put  on  currency  the  city  banks  would  wholly  escape  the  tax.  The 
Hill-Fowler  bill  imposes  no  penalty  for  failure  to  maintain  parity. 

INJUSTICE  TO   COUNTRY  PEOPLE   IN  PRESENT  LAWS. 

Our  country  people  have  been  so  outrageously  abused  in  the  banking 
laws  of  the  country  in  being  deprived  of  banking  facilities  during  the 
past  thirty  years  that  the  very  knowledge  of  "true  banking"  and 


150  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

"true  currency"  lias  been  lost  out  of  the  country.  This  most  popular 
and  useful  agency  known  to  civilization,  viz,  the  bank,  for  loaning 
capital  to  the  people,  is  hated  and  hissed,  and  justly  so,  were  the 
banks  themselves  responsible  for  this  outrageous  banking  system.  It 
is  hated  for  not  doing  what  it  is  forbidden  by  law  to  do,  and  not  for 
what  it  does.  I  stand  by  the  country  granger  in  his  protest  against  his 
oppression  rather  than  with  the  makers  of  Hill-Fowler  bills,  who,  know- 
ing their  oppression,  "keep  the  word  of  promise  to  the  ear  and  break  it 
to  the  heart."  "Four  years  hence  we  will  begin  substantial  relief  and 
you  will  get  it  in  eight  years."  They  aggravate  the  curse  by  saying  to 
him,  uGo  and  come  again  and  to-morrow  I  will  give,  when  thou  hast  it 
by  thee,"  Wait,  wait,  wait,  until  four  years  hence,  eight  years  hence, 
eleven  years  hence!  We  are  here  under  oath  to  legislate  for  the  relief 
of  our  people  now,  and  not  to  legislate  to  take  effect  in  the  days  when 
our  children  will  wear  the  mantle  of  authority  and  we  are  in  our  graves. 
I  know  strong  language  is  not  argument,  but  there  are  times  when 
men  do  not  serve  their  fellowmen  unless  they  use  language  strong 
enough  to  clearly  characterize  outrageous  conditions  and  conduct. 
Even  the  Great  Teacher  characterized  persons  who  bind  heavy  burdens 
grievous  to  be  borne  and  lay  them  on  men's  shoulders  and  then  do  not 
touch  them  with  so  much  as  their  little  finger. 

RELATIONS   OF   CITY  AND   COUNTRY  BANKS. 

Cities  are  built  up  by  building  up  the  country,  and  cities  decay  when 
the  country  districts  decay. 

The  country  banks  are  as  necessary  to  the  city  banks  as  the  mountain 
springs,  their  streams,  and  branches  are  to  great  rivers,  and  the  country 
bank  is  as  essential  to  the  prosperity  of  the  country  as  the  city  bank 
to  the  prosperity  of  the  city. 

The  whole  framework  of  every  bill  presented  to  the  Committee  on 
Banking  aiud  Currency,  excepting  the  Walker  bill,  is  drawn  in  despite 
of  this  axiom. 

The  prosperity  of  the  cities  can  only  be  in  the  prosperity  of  the  agri- 
cultural— the  country — districts  of  the  nation. 

Every  bill  presented  to  the  Committee  on  Banking  aud  Currency, 
excepting  the  Walker  bill,  denies  this  proposition. 

The  oppressions,  the  rank  injustice  to  the  agricultural  sections  of  the 
country  perpetuated  in  the  existing  national  banking  law  more  than  in 
the  errors  in  legislation  in  all  other  national  and  State  laws  combined  has 
contributed  to  the  depopulation  of  the  country  and  the  uneconomic  and 
undesirable  swelling  of  city  populations. 

Men  can  not  borrow  money  of  individuals  or  of  the  officers  of  a  bank 
they  do  not  know,  do  not  meet  in  their  homes,  in  their  churches,  in 
their  lodge  rooms,  in  their  trading,  in  the  daily  walks  of  life,  etc.  It  is 
so  in  the  country  as  much  and  no  more  than  in  the  city.  Country 
people  can  not  borrow  in  cities  or  in  large  towns  twenty  miles  from 
home — in  other  words,  where  they  are  not  intimately  known — excepting 
those  with  rare  and  exceptional  means  of  acquaintance. 

CITY  BANK  VERSUS  COUNTRY  BANK. 

A  strictly  city  bank  in  a  reserve  city,  satisfying  the  infinite  variety 
of  wants  of  its  customers,  with  its  large  individual  deposit  account, 
complex  business  expedients,  and  many  forms  of  money  obligations, 
differs  very  widely  Com  a  strictly  country  bank  satisfying  the  limited 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  L51 

wants  of  its  customers,  with  its  large  volume  of  circulating  notes  in  the 
place  of  individual  deposits,  simple  business  expedients,  and  few  forms 
of  money  obligations.  They  arc  as  much  alike  and  unlike  as  a  Broad- 
way  omnibus  and  a  McCormick  reaper.  Both  arc  drawn  by  borses  and 
men  ride  on  both.  The  city  bank  with  its  way  ot  doing  business  would 
be  as  useful  in  a  rural  community,  or  ;i  country  bank  in  a  reserve  city, 
as  a  reaper  on  Broadway  or  an  omnibus  in  a  wheat  field. 

The  Bill-Fowler  bill  provides  only  for  the  omnibus,  and  the  making 
of  the  reaper  under  it  is  impracticable. 

Under  the  Walker  bill  both  are  kept  constantly  in  view.  Both  ran 
be  constructed,  and  each  used  with  equal  advantage  in  its  proper  place. 

RELATIONS  OF  CAPITAL  TO  BANKING. 

In  proportion  as  communities  are  advanced  in  both  wealth  and  cul- 
ture is  capital  aggregated  in  banks  for  the  convenience  of  each  and 
every  citizen  who,  without  capital,  has  sufficient  integrity,  ability,  indus- 
try, and  wisdom  to  make  it  reasonably  certain  that  he  will  return  the 
capital  borrowed  and  what  is  agreed  upon  as  interest  or  rent  for  its 
use.  In  modern  society  business  can  not  be  profitably  done  without 
nearly  every  doer  of  it  has  a  partner  in  the  enterprise,  viz,  the  bank. 
Through  borrowing  of  capital  from  a  bank,  and  that  only,  it  is  made 
possible  for  the  worthy  poor  boy  of  to-day  to  conquer  to-morrow  the 
place  of  the  rich  man  of  to-day. 

These  aggregated  banks  are  of  two  kinds,  and  each  bears  a  certain 
proportion  to  the  aggregate  of  wealth. 

1.  The  commercial  banks,  or  "banks  of  deposit,  loan,  and  discount," 
have  to  do  wholly  with  personal  property,  and  have  capital  and  cash 
to  about  12,000,000,000  to  $20,000,000,000  total  of  personal  property. 
Their  aggregate  capital  is  about  8  per  cent  to  the  total  of  personal 
property  in  the  country.  Adding  $2,680,367,000  deposits  and 
$1,000,000,000  currency,  it  will  carry  the  percentage  of  banking  funds 
to  total  personal  property  up  to  about  22  per  cent  banking  funds  to 
total  personal  property. 

2.  Trust  companies  of  various  names  and  kinds,  such  as  savings 
banks,  loan  and  trust  companies,  life  insurance  companies,  etc.,  have 
to  do  wholly  with  realties,  and  have  a  capital  of  about  $8,000,000,000 
to  real  estate  property  of  $10,000,000,000,  their  aggregate  capital  being 
20  per  cent  to  the  real  estate  in  the  country. 

Capital  ceases  to  be  capital  wheu  it  ceases  to  afford  an  income.  Cap- 
italists therefore  are  always  hunting  for  young  men  of  integrity,  ability, 
and  industry  who  will  borrow  capital  of  them  and  pay  a  small  rental 
on  it,  while  the  borrower  of  this  capital  makes  a  new  fortune  for  him- 
self in  using  the  borrowed  capital  to  develop  the  country. 

These  reservoirs  of  capital  are  the  only  things  in  civilized  society  that 
enable  the  man  owning  no  capital  to  compete  with  the  capitalist.  Any- 
thing that  hinders  or  in  any  way  prevents  the  aggregating  of  capital  in 
any  community  for  the  purpose  of  devoting  it  to  loans  to  the  worthy 
man  who  has  no  capital  or  not  sufficient  capital  for  useful,  safe,  and 
legitimate  business,  or  increases  interest  on  capital,  is  a  fearful  curse 
to  the  country.  Very  careful  and  conservative  estimates  show  that  the 
agricultural  and  surburban  sections  of  our  country  are  deprived  of 
$800,000,000  of  banking  funds,  as  compared  with  their  per  capita  and 
city  per  capita  bank  funds,  as  compared  with  their  bank  lands  to  their 
personal  property  in  1800  and  to  day,  or  fully  15  per  cent  to  the  total 
bank  funds  in  the  country.     The  Hill-Fowler  bill  provides  the  begin- 


1J2  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

ning  of  a  modicum  of  relief  to  these  people  in  four  years,  to  be  consum- 
mated in  eight  years.  This  final  relief  is  so  small  at  the  best  as  to  be 
unworthy  of  the  effort,  and  this  promise  even  is  of  very  doubtful  ful- 
fillment. 

Under  the  Walker  bill  the  relief  in  the  additional  banking  funds  to 
the  sections  of  the  country  now  destitute  would  surely  come,  and  at, 
once. 

♦BILL  H.  B.  10339  AS  COMTABED  WITH  BILL  H.  B.  10333. 

I  am  constantly  met  with  the  statement,  "Your  bill  is  too  long;  why 
don't  you  make  it  shorter  and  more  simple?"  as  if  a  bill  dealing  with 
the  most  complex  and  worst  financial  and  bank  system  any  civilized 
nation  ever  had,  and  at  the  same  time  maintained  parity,  according  to 
the  testimony  of  writers  on  finance  and  of  financiers  of  great  experi- 
ence, such  as  lion.  Lyman  J.  Gage,  Secretary  of  the  Treasury;  the 
Hon.  Charles  S.  Fail  child,  ex-Secretary  of  the  Treasury;  the  Hon. 
James  H.  Eckels,  ex-Comptroller  of  the  Currency,  and  many  others, 
could  be  "as  simple  as  simple  can  be." 

Certainly  bill  H.  R.  10339  is  short  and  simple  enough.  I  drew  it  to 
accomplish  two  things:  To  show  how  unreasonable  is  the  remark 
quoted,  and  second,  to  show  how  simple  a  bill  would  have  accomplished 
in  1866  to  1870  precisely  what  my  bill  will  accomplish  to-day.  If  it  had 
been  passed  then  it  would  have  saved  the  country  from  a  sea  of  troubles. 
Had  such  a  bill  as  H.  R.  10339  been  passed  on  April  12,  18G0,  with  the 
bill  of  that  date  authorizing  the  Secretary  of  the  Treasury  to  sell  bonds 
t<  >  secure  funds  to  cancel  "  United  States  notes  not  to  exceed  $10,000,000 
in  the  first  six  months  and  $4,000,000  per  month  thereafter,"  our  diffi- 
culties would  have  ended  then  and  there.  It  was  all  the  legislation 
needed  then.  It  would  be  all  the  legislation  needed  to  day  had  we  no 
silver  dollars,  no  United  States  notes,  and  no  Treasury  notes.  The  law 
of  July  12, 18GG,  authorizing  the  retirement  of  the  United  States  notes, 
would  not  have  been  repealed,  as  it  was  in  January,  1869. 

Walker  bill  H.  R.  10339,  in  the  conditions  of  186G  to  1873, is  the 
financial  and  banking  equivalent  of  Walker  bill  H.  R.  10333  in  the  con- 
ditions of  1898. 

Had  bill  H.  R.  10339  passed  any  time  previous  to  January  14,  1875, 
the  legislation  of  that  date  again  passed  to  retire  the  United  States 
notes  would  not  have  been  again  needed  and  again  passed  only  to  be 
again  repealed  on  May  4,  1878. 

Had  our  statesmen  of  that  time  enacted  such  a  bill  the  New  England 
banks  would  have  returned  immediately  to  the  Suffolk  system  of  cur- 
rent redemption  in  Boston,  a  "large  central  commercial  city,"  which 
the  present  law  most  foolishly  and  viciously  forbids. 

New  York  would  soon  have  joined  New  England,  and  every  State 
bank  in  the  country  would  have  been  brought  into  the  system  precisely 
as  the  Walker  bill  provides  for  to  day,  and  New  York  would  soon  have 
taken  the  place  for  the  whole  country  that  Boston  held  for  New  Eng- 
land up  to  1864. 

In  fact,  that  bill  at  that  time  would  have  given  the  country,  by  the 
necessary  but  voluntary  combination  of  the  banks  in  the  country,  pre- 
cisely what  the  Walker  bill  would  give  the  country  to-day.  There  can 
be  no  doubt  that  the  banks  themselves,  without  any  action  of  the 

*On  pp.  240,  241. 


STRENGTHENING    THE    PU15LIC    CREDIT,  ETC.  lf)3 

United  States  Treasury  under  bill  II.  It.  10330,  would  have  resumed 
specie  payments  long  before  1870,  when  the  premium  on  gold  touched 
14.0,  and  run  down  in  1871  to  11.7,  etc.,  and  up  again  to  lo.l  in  L875. 
Had  such  a  bill  as  II.  K.  10339  passed  any  time  between  1866  to  1878, 
every  citizen  would  have  had  his  "  right  to  life,  liberty,  and  the  pursuit 
of  happiness"  in  money  matters  restored  to  him. 

All  business  men,  merchants,  manufacturers,  farmers,  bankers — all 
classes — were  clamoring  for  resumption  of  specie  payments  ever  after 
1866,  and  they  directed  and  controlled  the  banks.  The  banks  had  two 
to  three  times  the  gold  during  the  whole  period  from  1807  to  1879  that 
Secretary  of  the  Treasury  Sherman  had  in  the  United  States  Treasury 
when  we  resumed  in  1870.  As  a  matter  of  fact,  to  the  banks  belongs 
the  credit  of  the  conditions  making  resumption  of  specie  payments  by 
Secretary  Sherman  possible  in  1870. 

While  it  is  true  that  without  the  hearty  and  most  active  assistance 
of  the  banks  Secretary  Sherman  could  not,  by  any  possibility,  have 
resumed  specie  payments  in  1870,  it  is  also  true  that  had  the  Govern- 
ment  rendered  no  assistance  whatever  the  banks  could  and  would  have 
resumed  long  before  1873  under  such  a  bill  as  H.  R.  10330  as  surely  as 
the  banks  can  and  will  maintain  parity  between  silver  dollars  and  gold 
dollars  and  between  all  our  paper  money  and  specie  to-day  under 
Walker  bill  II.  K.  10333  as  law,  for  there  is  no  conceivable  relief  except- 
ing under  a  law  drawn  on  the  lines  of  the  Walker  bill. 

The  Walker  bill  is  simplicity  itself  as  compared  with  any  other  gen- 
eral bill  that  has  been  before  the  Committee  on  Banking  and  Currency. 
It  is  as  unjust  to  criticise  the  Walker  bill  of  to-day  because  it  is  long 
enough  and  none  too  long,  and  complex  enough  and  none  too  compl< 
to  meet  all  the  chaotic  and  complex  conditions  that  do  exist  to-day,  and 
to  surely  settle, them,  and  without  the  slightest  shock  to  our  financial 
and  banking  conditions  during  the  transition,  even  during  a  panic,  as  it 
would  have  been  to  have  criticised  the  Walker  bill,  H.  11.  10339,  offered 
before  1875,  because  it  "was  not  long  enough"  and  "complex  enough" 
to  meet  conditions  not  then  chaotic  and  not  complex. 

A  condition  a  hundredfold  more  difficult  than  confronted  Alexander 
Hamilton  and  Albert  Gallatin  in  this  country  or  John  Locke  or  Sir 
Isaac  Newton  in  England  can  not  be  settled  by  ratiocination,  as  is 
attempted  by  the  framers  of  the  Hill-Fowler  bill.  To  solve  the  problem, 
patient  investigation  and  severe  study  are  necessary  to  the  brightest  and 
ablest  men.  Late  coiners  are  welcome,  but  the  Hill-Fowler  bill  shows 
the  result  of  their  insisting  on  taking  the  front  seats. 

What  was  the  Republican  party  doing  in  this  matter  from  1800  to 
1^3?  What  is  it  doing  now1?  What  was  the  Democratic  party  doing 
from  1S0G  to  1873?    What  is  it  doing  now  ? 

THE   STJBTREASURY  SYSTEM. 

Never  before  was  a  practice  continued  so  long  after  its  substance  had 
departed  as  our  subtreasury  system.  The  national  snbtreasury  system 
as  now  administered,  violates  every  principle  it  was  established  to  put 
into  practical  operation. 

When  it  was  established  the  idea  of  Jackson  was  to  keep  the  Gov- 
ernment Treasury  entirely  independent  of  banks  and  to  be  itself  in 
antagonism  to  banks. 

To-day  it  has  become  the  fundamental  and  responsible  bank  of  all 
banks  in  ito   connection   with   the  New  York  Clearing    House,   the 


154  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

guarantor  of  the  value  of  all  banking  funds  as  well  as  paper  money, 
and  the  reservoir  from  which  is  drawn,  in  times  of  monetary  stringen- 
cies and  panic,  the  gold  for  shipment  and  the  gold  that  keeps  the  sol- 
vency of  all  banks.  In  fact,  it  has  become  the  exact  opposite  of  what 
Jackson  made  it  and  intended  it  to  continue  to  be.  The  Hill-Fowler 
bill  intensities  its  subserviency  to  banks  as  the  guarantor  of  the  value 
of  their  lands  and  the  supplier  of  gold  to  banks  and  to  brokers,  both 
foreign  and  domestic. 

Under  the  Walker  bill  every  one  of  these  conditions  would  be 
reversed.  The  National  Clearing  House  would  be  first  of  all  the  serv- 
ant of  the  Government  and  the  guarantor  of  the  Government  funds 
and  the  receptacle  of  all  gold  and  the  guarantor  of  parity,  and  in  turn 
the  furnisher  of  all  needed  gold  for  domestic  use  or  shipment,  and 
this  at  a  profit  to  banks,  whose  servant  it  would  be.  It  would  be  able 
to  protect  the  commercial  gold  in  the  country,  as  the  banks  of  Eng- 
land, France,  and  Germany  each  protect  its  gold.  It  would  also  main- 
tain parity  and  pay  out  gold  and  silver,  precisely  as  does  the  Bank  of 
France  and  the  Bank  of  Germany. 

EVILS  OF  SUBTREASURY  SYSTEM. 

*'  Whatever  may  have  been  the  condition  of  the  banks  of  the  country 
which  seemed  to  justify  the  establishment  of  the  subtreasury,  it  is 
to-day  the  greatest  curse  that  afflicts  the  finances  of  the  country.  It 
not  only  places  duties,  powers,  and  opportunities  in  the  hands  of  the 
United  States  Treasurer  such  as  no  human  being  should  ever  be 
intrusted  with,  but  it  compels  him  to  do  what  is  made  a  misdemeanor, 
visited  with  severe  penalties  when  done  by  a  bank,  and  would  not  be 
submitted  to  for  a  day  if  done  by  an  individual,  namely,  it  locks  up 
the  money  of  the  people.  The  making  of  any  loan  upon  the  security 
of  United  States  or  national-bank  notes,  or  agreeing  for  a  considera- 
tion to  withhold  the  same  from  use;  in  other  words,  the  "locking  up" 
of  money,  is  made  a  misdemeanor,  and  the  bank  committing  the  offense 
is  punishable  by  a  fine  of  $1,000  and  a  further  sum  of  one-third  of  the 
money  so  loaned.  The  officers  of  the  bank  making  the  loan  are  also 
subject  to  a  penalty  equal  to  one-quarter  of  the  money  loaned. 

"This  provision  of  law  is  not  applied  to  individuals,  because  locking 
up  money  is  an  offense  they  do  not  commit  without  the  assistance  of 
banks.  These  severe  penalties  were  provided  because  the  locking  up 
of  money  was  an  injury  to  the  public;  and  furthermore,  the  injury  is  in 
exact  proportion  to  the  amount  of  money  locked  up,  and  is  not  made 
any  greater  or  less  by  the  'locking  up'  being  done  by  a  bank,  an  indi- 
vidual, or  by  the  United  States  Treasurer. 

"Yet,  in  the  face  of  the  enactment  of  a  law  by  the  United  States 
Government  severely  punishing  a  bank  for  withholding  currency  from 
circulation,  it  maintains  the  subtreasury  in  violation  of  every  sound 
maxim  of  finance,  in  violation  of  the  laws  governing  the  banks,  and  in 
the  face  of  the  damage  to  the  industries  of  the  country  admitted  to  be 
done  by  it  every  day  of  its  existence,  now  necessarily  inflating  and 
now  necessarily  curtailing  the  volume  of  the  circulating  medium  by  the 
accumulation  in  or  the  disbursements  from  the  Treasury." — [Money, 
Trade,  and  Banking  (p.  81),  by  J.  H.  Walker.  Houghton,  Mifflin  &  Co., 
Boton,  1882J 

The  Hill-Fowler  bill  t  ould  perpetuate  and  intensify  every  one  of  these 
Treasury  abuses. 

The  Walker  bill  would  correct  every  one  of  them,  and  that  at  once. 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  15.") 

TREASURY  CONDITIONS. 

No  one  who  knows  them  would  make  a  comparison  between  Hon. 
John  (1.  Carlisle  and  Hon.  Lyman  .J.  Gage  to  the  detriment  of  either. 
Bach  stands  at  the  head  of  his  profession,  Hon.  John  G.  Carlisle  in 
integrity  and  as  a  lawyer  and  eminent  parliamentarian,  and  Hon.  Lyman 
J.  Gage  in  integrity  and  as  a  financier  and  banker.  Bach  has  held  the 
Treasury  portfolio  under  a  condition  of  deficit  in  Treasury  receipts  to 
meet  Treasury  expenditures.  One  an  eminent  lawyerunder  Hon.  (iio\  er 
Cleveland,  the  other  an  eminent  financier  under  William  McKinley. 
The  strictly  "Treasury  conditions"  were  identical  under  each.  Cinder 
Carlisle  confidence  was  destroyed  by  conditions  entirely  outside  the 
Treasury  proper.  Because  of  these  conditions  we  had  thepanicof  1893, 
with  ruined  private  credit,  the  sale  of  United  States  bonds  at  ruinous 
prices,  and  its  millions  and  billions  of  dollars  in  shrinkage  of  values  and 
the  wrecking  of  fortunes  and  distress  of  the  people.  Under  Mr.  Gage, 
even  in  war,  confidence  is  assured,  and  by  conditions  entirely  outside 
the  Treasury  proper.  The  Hill-Fowler  bill  leaves  us  in  exactly  the 
same  condition  as  Mr.  Cleveland  and  Carlisle  found,  and  the  same 
results  will  follow  the  same  conditions. 

The  Walker  bill  completely  separates  the  United  States  Treasury 
from  our  financial  institutions  immediately  and  forever,  and  makes  the 
Carlisle-Cleveland  condition  of  .1893  impossible. 

It  is  no  answer  to  cite  tariffs  or  financial  theories  of  administrative 
officers.  Assuming  that  losses  would  occur  under  one  tariff  and  gains 
under  another,  under  the  Walker  bill  as  law  they  could  not  materially 
affect  the  price  of  United  States  bonds  or  cause  a  panic  originating  in 
the  condition  or  administration  of  the  United  States  Treasury,  for  the 
Treasury  would  be  eliminated  from  finance  and  banking.  Opinions  as 
to  the  changes  or  threatened  changes  in  the  management  of  the  United 
States  Treasury  could  not  affect  the  business  of  the  country,  for  Treasury 
conditions  would  be  tixed  by  law,  and  unalterable  by  a  Secretary. 

Our  Treasury  and  banking  conditions  would  be  absolutely  independ- 
ent of  each  other,  each  under  the  management  of  its  own  officers,  and 
neither  could  control  or  materially  affect  the  other. 

Our  financial  system  would  then  be  founded  upon  a  rock  like  that  of 
France.  Our  system  then  would  be  more  like  that  of  France  than  that 
of  any  other  country,  but  superior  to  it  as  institutions  built  up  from 
the  bottom,  like  those  of  this  country,  are  more  enduring  than  those 
built  down  from  the  top,  like  that  of  France  and  its  bank. 

When  specie  payments  were  suspended  in  1870  gold  went  to  a  premium 
of  only  H  percent  in  the  paper  money  of  France,  and  soon  fell  to  1  per 
cent.  It  did  not  rise  again  until  the  payment  of  the  indemnity  to  Ger- 
many, and  never  rose  above  2.+  per  cent  premium  at  any  time,  and  \\ 
at  that  point  only  for  a  short  time — and  this  with  France  conquered,  its 
government  destroyed,  and  lying  helpless  at  the  feet  of  Germany. 

With  our  inexcusably  vicious  Treasury  system,  and  wholly  because 
of  the  union  of  our  banks  with  the  quick  assets  of  the  Treasury  and 
the  making  of  the  soundness  of  our  currency  dependent  on  the  price 
of  United  States  bonds,  a  gold  dollar  was  worth  during  1862  (1.13.  It 
sold  for  $1.45  in  paper  money  after  Gettysburg  on  duly  8,  and  after 
Vicksburg  fell  on  July  4, 1803,  and  when  our  final  victory  was  assured. 
After  Sherman  captured  Atlanta,  September  2,  1864,  a  gold  dollar 
averaged  to  sell  all  through  1864  for  $2.03  in  paper  money.  Then  no 
doubt  existed  as  to  the  stability  of  the  United  States  Government. 
During  Sherman's  march  from  Atlanta  to  Savannah  and  up  to  Virginia 


156  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

in  the  early  spring  and  until  Appomattox  on  April  8,  18G5,  gold  sold 
for  $1.57  in  paper. 

The  salvation  of  France  when  her  Government  was  utterly  destroyed 
and  a  Committee  of  Safety  was  trying  to  make  terms  with  her  conquer- 
ors camped  in  her  capital  and  Germany  held  her  chief  places,  the  Bank 
of  France  stood  like  a  shaft  of  marble  in  surrounding  chaos,  a  beacon 
of  liberty  to  her  people.  Look  again  at  this  significant  fact.  A  gold 
dollar  during  all  that  time  could  be  bought  for  $1.01  in  French  paper 
money,  excepting  for  a  few  months  after  peace  it  went  up  in  price  to 
$1.02£,  in  her  paper  money,  for  a  brief  time. 

The  Hill-Fowler  bill  is  potential  only  in  such  financial  humiliations  for 
the  future  as  those  from  1802  to  1879  and  of  1893,  as  surely  as  under 
like  conditions  history  will  repeat  itself. 

Under  the  Walker  bill  they  would  be  impossible.  It  would  correct 
every  evil.  As  independent,  self-sufficient,  and  even  stronger  than  the 
Bank  of  France  is  its  system  of  union  of  every  commercial  bank  in  the 
country  into  one  whole.  A  system  democratic  to  each  bank  and  still  a 
unit  in  a  completed  whole. 

WASTE   OF  THE   PRESENT   SYSTEM. 

The  direct  and  inevitable  waste  in  the  present  system  demands  imme- 
diate action.  The  Treasury  has  only  kept  its  place  in  the  New  York 
Clearing  Ilouse  and  kept  the  parity  between  silver  coin  and  gold  coin 
and  between  our  paper  money  and  specie  by  keeping  in  the  Treasury 
an  average  available  cash  balance  of  $204,000,000,  including  "agency 
accounts,"  for  the  eighteen  years  from  1880  to  1897,  inclusive — about 
$120,000,000  in  free  gold.  Allowing  for  a  "  working  balance"  of  more 
than  England,  France,  or  Germany  averages  to  keep — say  $35,000,000 — 
haves  $170,000,000. 

Collected  by  taxes  from  the  people  and  needlessly  kept  in 
the  Treasury,  $170,000,000,  worth  to  the  people,  0  per 
cent $10,  200,  000 

The  needless  expense  of  the  subtreasury 1, 000,  000 

Annual  Treasury  loss 11, 200,  000 

It  was  stated  by  Secretary  Gage  and  Ex-Secretary  Fairchild,  and  is 
conceded  by  all  writers  on  finance,  that  all  currency  that  is  issued,  as 
it  is  in  Great  Britain,  France,  Germany,  and  all  other  nations  except- 
ing the  United  States,  and  "  kept  out"  by  banks, is  earning  the  banks 
the  rate  of  interest  charged  its  customers  on  loans,  and  that  it  inva- 
riably lessens  the  rates  of  interest  charged  in  the  same  proportion  that 
the  average  currency  actually  out  in  circulation  bears  to  the  total 
loans  and  discounts  of  banks.  Under  the  present  banking  law  there 
is  practically  nothing  made  on  bank  currency  when  banks  are  com- 
pelled to  buy  bonds  to  get  it  at  the  prices  prevailing  from  1800  to  1892, 
and  in  any  prosperous  times.  There  is  over  $1,000,000,000  of  paper 
money  in  circulation  in  the  couutry.  At  least  $800,000,000  would  be 
circulated  by  banks  if  the  Walker  bill  was  made  a  law;  or  if  it  was 
issued  here  as  it  is  issued  in  all  other  countries,  at  5  per  cent,  it  equals 
840,000,0(10.  That  would  then  be  saved  to  the  people  in  lower  rates  of 
interest  on  bank  loans. 

At  the  very  least  estimate  of  the  cost  the  direct  and  indirect  tax  on 
the  people  is  $50,000,000  per  annum.    It  is  really  many  millions  more, 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  157 

mostly  falling  on  the  agricultural  sections  of  the  country,  as  large  city 
banks  buy  United  States  bonds  as  an  investment. 

Adding  to  this  loss  the  premiums  paid  on  United  States  bonds  the 
Government  was  forced  to  buy  with  the  taxes  on  the  people  accumu- 
lated in  the  Treasury,  in  order  to  save  our  whole  banking  system  from 
wreck, and  the  losses  from  monetary  stringencies  and  panics  which  are 
wholly  chargeable  to  the  system,  it  can  he  conclusively  proven  to  any 

body  of  unprejudiced,  plain  men  that  hundreds  of  millions  into  the 
billions  woidd  not  cover  actual  unnecessary  and  inexcusable  loss  in 
recent  years.  The  conditions  that  prevailed  in  L893  are  sure  to  recur 
again  to  a  greater  or  less  extent  unless  the  bank  act  is  wisely  amended. 
Some  aspects  of  the  situation  even  now  are  more,  threatening  and  por- 
tentous of  evil  than  they  were  from  1880  to  L892. 

In  view  of  the  incontrovertible  tacts  already  stated  it  appears  that 
the  solution  of  our  financial  and  banking  ills  is  not  possible  by  any  bill 
drawn  on  the  lines  of  the  Hill-Fowler  bill,  or  any  bill  yet  presented  to 
the  Committee  on  Banking  and  Currency,  excepting  only  the  Walker 
bill,  H.  R.  10;;:;.;. 

COMPARISON   OF   niLL-FOWLER  BILL  AND   "WALKER  BILL. 

The  Dill-Fowler  bill  is  written  in  obliviousness  of  the  fact  that  bank- 
ing is  wholly  a  voluntary  business  and  comparatively  few  of  those 
engaged  in  it  receive  pay.  Banking  law  should  contain  no  mandatory 
provision  that  by  any  safe  permissible  form  of  application  of  small 
pressure  can  be  avoided.  The  Hill- Fowler  bill  is  fatally  mandatory  in 
several  matters. 

The  Walker  bill,  in  this  respect,  is  wholly  different.  It  sets  up  only 
a  very  few  very  wide  boundaries  and  allows  banks  to  manage  their  own 
business  in  their  own  way  as  far  as  it  is  safe  to  the  people  who  borrow 
money  from  them. 

The  Hill-Fowler  bill  does  not  relieve  the  United  States  Treasury 
from  the  current  redemption  of  every  form  of  paper  money  and  from 
any  responsibility  whatever  for  maintaining  the  parity  of  our  various 
kinds  of  money. 

The  Walker  bill  securely  does  both. 

The  Hill-Fowler  bill  does  not  devolve  these  duties  upou  the  banks  of 
the  country. 

The  Walker  bill  securely  does  it. 

The  Hill-Fowler  bill  does  not  allow  banks  to  issue  "true  bank  cur- 
rency," viz,  currency  against  their  assets,  to  any  proportion  that  would 
foster  country  banks. 

The  Walker  bill  allows  its  issue  to  the  amount  of  the  capital  of  the 
bank. 

The  Hill-Fowler  bill  makes  no  attempt  to  securely  unite  all  the  com- 
mercial banking  associations  of  the  country  into  one  compact  system  to 
securely  and  safely  do  the  things  it  proposes. 

The  Walker  bill  securely  does  it. 

The  Hill-Fowler  bill  runs  counter  to  all  writers  on  finance  and  the 
judgment  of  practical  financiers  and  bankers,  who  all  agree  in  the  fol- 
lowing as  of  the  first  importance  in  providing  a  paper  money  currency, 
viz,  that  it  shall  be — 

1.  Safe. 

2.  Freely  issued. 

3.  Abundant. 


158  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

4.  Uniform. 

5.  Elastic. 

The  currency  provided  in  that  bill  fails  at  every  point.  It  is  far  from 
being  as  safe  in  being  guaranteed  by  the  Government  as  that  of  the 
Walker  bill.  It  is  neither  as  freely  issued,  as  abundant,  as  uniform, 
nor  as  elastic. 

MONET  IN  EXISTENCE. 

The  Hill-Fowler  bill  takes  the  six  kinds  of  paper  money:  * 

1.  United  States  notes  (legal  tender) $346, 681, 016 

2.  Treasury  notes - 101,  575,  280 

3.  Currency  certificates 29, 130,  000 

4.  National-bank  notes 228, 203, 926 

5.  Gold  certificates 37,  466, 149 

6.  Silver  certificates 398,  768,  504 

Legal  tender  coin: . 

8.  Gold 760,  274,  281 

9.  Silver 461, 180, 422 

and  proposes  to  destroy  three  kinds  of  this  paper  money,  United  States 
notes  and  gold  certificates  and  national-bank  notes,  and  substitute 
three  new  kinds,  all  "bank  currency"  notes: 

National  reserve  notes, 

National-bank  notes, 

National  currency  notes, 
leaving  seven  kinds  of  paper  money  afloat,  as  now.    (The  Treasury 
notes  will  be  disposed  of  by  coining  silver  bullion  to  pay  them  as  the 
country  grows.) 

WALKER  BILL  APPROVED. 

Every  word  that  discusses  general  principles  in  the  report  accom- 
panying the  Hill-Fowler  bill  approves  the  Walker  bill  and  condemns 
that  bill,  and  yet  their  bill  continues  the  hardships  of  the  present 
system.    The  report  says: 

"The  ideal  condition  will  be  reached  when,  the  person  having  made 
the  necessary  deposit,  the  bank  can  furnish  him  either  a  check  book  or 
its  notes  with  equal  ease  and  at  equal  cost,  leaving  the  customer  to 
select  the  form  of  demand  obligation  which  will  best  serve  his  legiti- 
mate business  purposes.  As  a  matter  of  fact,  the  same  management 
of  the  bank  which  will  render  the  check  safe  will  make  the  note  safe. 
But,  as  has  been  said  earlier,  the  note  is  to  go  everywhere  and  be  used 
by  people  unacquainted  with  each  other  or  with  the  bank.  To  facili- 
tate its  use,  therefore,  it  must  be  issued  under  a  system  which  can  be 
readily  understood  and  which  will  give  to  the  people  generally  such 
assurance  of  the  goodness  of  the  note  that  it  will  be  accepted  without 
hesitation  by  everyone. 

•kit  is  obvious  that  the  issue  of  a  banking  currency  based 
purely  upon  assets,  without  either  bonds  or  reserve  notes,  will  involve 
no  risk  of  undue  i Dilation  or  of  loss  to  the  note  holder. 

*  "The  people  will  have  the  use  of  nearly  double  the  amount 
of  coin  and  currency  at  about  one-half  the  rate  of  interest  they  are  now 
compelled  to  pay.    Thus  the  capacity  to  make  larger  loans  means  the 

*In  existence  June  16,  1898,  per  Treasury  report, 
i Estimate  by  Treasury  Department  for  June  1,  1898. 


STRENGTHENING    THE    PUBLIC    CREDIT,   ETC.  L59 

capacity  of  the  banks  to  reduce  interest  rates  without  loss  of  profits. 
It  means  that  if  any   bank  undertakes   to  resist    the   natural    law    of 

decreasing  interest  uuder  increased  facilities,  new  banks  may  be  formed 
without  sinking  their  capital  in  bonds  purchased  <>/  a  premium,  and 
may  compete  for  the  legitimate  profits  afforded  by  reasonable  interest 

rates.  More  than  this,  a  currency  based  upon  commercial  assets,  and 
not  rendered  rigid  in  volume  by  the  deposit  of  special  security,  (ponies 
Pack  promptly  to  the  issuing  banks  for  redemption.    *    *    * 

••Mr.  A.  O.  Eliason  has  examined  all  the  bank  failures  whose  accounts 
have  been  closed,  numbering  one  hundred  aud  one,  and  found  that  had 
all  the  banks  in  the  national  system  issued  an  amount  of  currency  equal 
to  their  capital,  or  one  hundred  per  cent,  the  assessment  on  the  same  to 
cover  losses  would  have  been  infinitesimal,  being  only  one-nineteenth 
of  one  per  cent  per  annum." 

Alter  thus  approving  most  heartily  and  thoroughly  the  principles  of 
the  Walker  bill,  which  provides  the  annual  collection  from  the  hanks 
of  four  times  the  amount  necessary  to  make  the  Government  safe  in 
guaranteeing  the  currency  notes  banks  would  put  in  circulation,  they 
present  a  bill  which  leaves  60  per  cent  currency  to  capital  without  the 
guaranty  of  the  Government,  and  also  compels  the  country  banks  to 
"  sink  their  capital  in  bonds  purchased  at  a  premium  "  to  the  tune  of  40 
per  cent  to  their  capital,  and  furthermore  discredits  their  currency 
issued  against  their  assets  by  twelve  disabilities. 

The  lack  of  appreciation  by  the  framers  of  the  Hill-Fowler  bill  of 
true  principle  and  practice  in  issuing  and  redeeming  paper  money  is 
shown  by  their  proposition  to  destroy  the  "endless  chain,"  as  follows: 

"Believing  that  this  bill,  if  enacted  into  law,  will  relieve  the  Treas- 
ury by  destroying  the  'endless  chain.'" 

Secretary  Gage  and  ex  Secretary  Fairchild,  as  everyone  knows  is 
true,  testifying  in  answer  to  the  chairman,  recognized  the  "endless 
chain"  of  currency  redemption  as  an  inherent  aud  necessary  condition 
to  sound  paper  money,  as  follows : 

The  Chairman.  Can  you  suggest  a  more  apt  illustration  of  the  nec- 
essary inevitable  constant  How  of  currency  in  and  out,  coming  in  contact 
potentially  with  the  specie  it  represents,  than  an  endless  chain  which 
never  ceases  for  an  instant  to  move  potentially  or  actually,  and  that  any- 
thing that  impairs  any  link  of  the  chain  does  the  currency  system  injury? 
Can  either  of  you  gentlemen  suppose  a  more  apt  illustration? 

Secretary  Gage.  I  think  there  are  a  dozen  you  might  use. 

The  Chairman.  Will  you  suggest  any  one  of  the  dozen? 

Secretary  Gage.  Say  individual  buckets.  We  have  adopted  the  end- 
less chain  as  a  figure  of  speech,  which  probably  conveys  nearly  the  idea 
involved,  namely,  that  whoever  has  demands  against  the  Government 
or  anyone  else  can  take  those  demands  and  have  them  realized  in 
redemption  money,  in  specie.  If  these  obligations  are  again  issued,  the 
new  holder  can  do  the  same,  and  so  there  is  a  sort  of  circle  established, 
or,  it  maybe,  on  the  one  hand, the  notes  flow  out,  and  in  1  he  course  of  the 
movement  of  trade  or  commerce  or  distrust  the  notes  come  back  in  a 
circular  movement.  That  is  not  a  horrible  thing;  it  is  natural,  rea- 
sonable, and  proper,  and  the  issuer  should  never  complain.  Let  him 
meet  his  liabilities  on  demand. 

The  Chairman.  Is  not  that  what  will  take  place  in  making  a  redemp- 
tion fund? 

Secretary  Gage.  I  think  it  is. 

The  Chairman.  Can  you  suggest  anything  further,  Mr.  Fairchild! 

Mr.  Fairchild.  No,  sir;  I  think  that  is  perfectly  true. 


160  STRENGTHENING   THE    PUBLIC    CREDIT,  ETC. 

CURRENCY  PROVISIONS   OF  THE  HILL-FOWLER  BILL. 

The  nill-Fowler  bill  puts  the  mark  of  Cain  on  its  national  currency 

notes.    This  money  is  for  our  country  people.     Not  a  dollar  of  this 

money  will  be  issued  by  banks  in  redemption  cities  which  have  half  the 

paid-up  capital  of  national  banks. 

Sec  30.  (1)  It  is  taxed  6  per  cent  per  annum  if  issued  above  40  per 
cent  to  capital. 

Sec.  30.  (2)  If  in  the  vaults  of  the  bank  and  not  in  use  this  excess  over 
10  per  cent  is  still  taxed  <>  per  cent. 

Sec.  33.  (3)  In  liquidation  only  gold  coin  can  be  deposited  to  cancel 
these  notes. 

Sec.  23.  (4)  Must  put  up  with  the  Government  5-per-cent  gold  "guar- 
anty fund"  on  them,  in  addition  to  the  current  redemp- 
tion fund  it  puts  up. 

SEC.  22.  (5)  Has  a  separate  "  current  redemption  "  from  the  other  two 
kinds  of  bank  money. 

Sec.  22.  (G)  Must  be  marked  "  plainly  and  prominently,"  so  as  to  at- 
tract attention  to  its  being  a  poorer  kind  of  money,  that 
it "  belongs  distinctively  to  someone  clearing-house  dis- 
trict." 

Sec.  22.  (7)  Can  not  be  paid  out  by  any  bank  out  of  its  "  redemption 
district." 

Sec.  22.  ^8)  Has  a  clearing-house  district  made  especially  for  it.  The 
district  is  not  for  and  does  not  include  the  other  two 
kinds  of  bank  currency. 

Sec.  22.  (9)  No  reserve  5-per-cent  or  other  fund  is  provided  for  their 
current  redemption  in  exception  to  the  other  two  kinds 
of  notes. 

Sec.  14.  (10)  No  funds  of  an  insolvent  bank  can  be  used  to  pay  any  of 
these  notes  until  the  other  notes  are  paid. 

Sec.  15.  (11)  That  the  Government  has  no  interest  in  making  this  "cur- 
page  13,  rency  note"  good  money  is  rightly  made  conspicuous 
line  11.  in  the  bad  form  designedly  given  these  notes  by  this 
provision.  "  It  [note]  shall  also  bear  upon  its  face  the 
statement  that  it  is  issued  in  accordance  with  the  provi- 
sions of  this  act."  These  things  will  sufficiently  damage 
these  "national-currency  notes." 

Under  the  Walker  bill  there  is  provided  a  currency  note  with  as 
strong  a  Government  guaranty  as  now.  Only  such  notes  are  used  in 
Canada,  Scotland,  France,  Germany,  England,  and  all  other  first-class 
nations.  The  Walker  bill  adds  the  guaranty  of  the  United  States  Gov- 
ernment. The  Walker  bill  provides  that  everyone  of  them  shall  be 
immediately  paid  by  the  United  States  Treasurer  in  case  of  the  insol- 
vency of  the  association  issuing  them.  The  Walker  bill  makes  an 
appropriation  to  pay  these  notes  of  every  association  in  case  of  its 
insolvency.  The  Walker  bill  provides  a  way  for  the  United  States  to 
collect  of  banks  and  have  on  hand  several  times  more  money  than  it 
can  ever  pay  on  this  guaranty. 

The  framcrs  of  the  Hill-Fowler  bill  are  not  willing  to  have  the  circu- 
lating bank  notes  provided  in  their  bill  and  issued  by  the  Government 
as  money,  used  to  pay  the  "salaries  and  other  debts  on  demand  owing 
by  the  United  States  to  individual  corporations  and  associations  within 
the  United  States,"  but  finding  such  a  provision  in  the  law  as  to 
national-ban li  notes,  repeats  it. 


STRENGTHENING   THE    PUBLIC    CREDIT,  ETC.  101 

Under  the  Walker  bill  no  such  discrimination  against  any  form  of 
onr  money  is  made.  All  kinds  of  paper  money  are  made  and  kept  as 
good  as  the  best  by  the  Government. 

GREENBACKS  NOT  DESTROYED  BY  THE  WALKER  BILL. 

Neither  does  the  Walker  bill  destroy  the  United  States  notes.  The 
Hill-Fowler  bill  does  destroy  them.  The  Walker  bill  keeps  them  exactly 
as  they  now  are,  and  puts  their  current  redemption  on  the  banks.  The 
Walker  bill  proposes  to  destroy  all  the  gold  certificates  and  silver  cer- 
tificates and  pay  out  to  the  people  the  gold  and  silver  dollars  in  their 
place.  Thus  the  Hill-Fowler  bill  provides  six  kinds  of  paper  money 
in  permanency,  no  one  of  them  legal  tender,  in  violation  of  sound  bank- 
ing principles,  while  the  Walker  bill  provides  bnt  one,  viz,  currency 
notes,  in  accord  with  common  sense  and  sound  banking. 

The  Hill-Fowler  bill  does  not  make  the  United  States  Government 
as  now  responsible  for  the  immediate  payment  of  every  dollar  of  the 
currency  notes  issued  by  it  to  a  bank  in  case  of  insolvency  and  directly 
out  of  the  United  States  Treasury,  and  without  qualifications  or  delay 
and  regardless  of  all  contingencies. 

The  Walker  bill  makes  the  Government  of  the  United  States  the 
guarantor  of  every  dollar  of  currency  issued  by  it  to  a  bank  as  now, 
and  makes  an  appropriation  from  the  Treasury  in  the  body  of  the  law 
to  secure  the  immediate  payment  of  such  notes  by  the  Treasurer  as 
certain  as  it  is  to-day. 

The  Hill-Fowler  bill  makes  confusion  in  redemption  by  providing  two 
distinctive  redemption  agencies  for  its  three  kinds  of  circulating  bank 
notes,  and  one  of  them  outside  the  banking  system. 

The  Walker  bill  provides  one  redemption  for  its  one  kind  of  bank 
notes,  and  that  inside  the  banking  system. 

The  Hill-Fowler  bill  appears  to  be  drawn  in  the  interest  of  large 
city  banks.  It  gives  such  banks  every  advantage  and  unfairly  dis- 
criminates against  country  banks. 

The  Walker  bill  is  drawn  in  fairness  to  large  banks  and  small  banks, 
city  banks  and  country  banks,  for  farmers,  for  merchants,  and  for  manu- 
facturers. 

The  people  having  been  thoroughly  educated  in  the  idea  that  no  true 
bank  currency,  that  is  to  say,  currency  issued  against  the  assets  of  the 
bank  and  relying  wholly  upon  them  for  payment  in  case  of  insolvency, 
can  be  safe  for  them  to  have  in  their  pockets,  therefore  it  becomes 
absolutely  necessary  to  have  all  currency  guaranteed  by  the  Gov- 
ernment, as  now.  A  guaranty  may  be  given  in  five  different  forms — 
by  a  mortgage,  by  pledging  bonds,  by  an  agreement,  by  indorsement, 
and  also  by  certifying  to  the  genuineness  of  a  paper  and  that  the 
certifier  is  in  possession  of  funds  to  pay  it,  like  certifying  a  bank  check. 

All  but  the  note  secured  by  mortgage  depends  wholly  upon  the  sol- 
vency and  amount  of  capital  possessed  by  the  party  making  the  security 
in  proportion  to  the  amount  guaranteed,  whether  it  be  a  person  or  the 
United  States  Government.  No  one  can  deny  that  an  appropriation 
made  in  the  body  of  the  banking  law  out  of  any  moneys  in  the  Treas- 
ury not  otherwise  appropriated  to  pay  the  notes  ot  an  insolvent  bank 
is  as  good  a  security  and  more  easily  availed  of,  and  is  tantamount  to 
a  Government  bond.  "  To  guarantee"  is  the  synonym  of  "  to  secure,"  if 
made  by  the  same  party  and  without  mortgage.  To  argue  that  a 
United  States  Government  bond  is  a  better  guaranty  or  security  than 

B  &  C 11 


L62  STRENGTHENING   THE    PUBLIC    CREDIT,  ETC. 

an  appropriation  in  money  in  a  United  States  law  is  to  argue  that  a 
"promise  to  pav"  is  better  than  "cash  in  hand." 

The  compensation  to  the  United  States  Treasury  for  guaranteeing 
the  currency  notes  issued  by  the  banks  would  run  as  follows: 

On  $200,000,000  of  United  States  notes  carried  by  banks, 

at  2.i  per  cent $5>  000>  00° 

Maintaining  parity  on  $500,000,000  of  silver  dollars,  for 
which  all  the  other  bills  propose  to  deposit  5  per  cent 
gold  in  the  Treasury,  which  would  equal  $25,000,000  at 
2£  per  cent 625>  °°0 

One-fifth  of  1  per  cent  tax  on  $600,000,000  of  currency ....     1,  200, 000 

Gain  on  that  part  of  the  currency  destroyed  and  never 
presented  for  redemption,  as  proved  by  the  thirty  years' 
experience  of  the  Treasury,  two-fifths  of  1  per  cent  on 
$000,000,000  is 2,  400,  000 

9, 225, 000 
Saving  in  cost  in  handling  the  United  States  Treasury 1, 000, 000 

10, 225,  000 
The  necessity  under  present  conditions  of  carrying  an  im- 
mense amount  of  money  collected  by  taxation  in  the 
United  States  Treasury,  $175,000,000  at  2 J  per  cent  ....     4, 375, 000 

Saving  per  annum  to  the  United  States  Treasury  . .  14, 600, 000 

This  at  2 J  per  cent.  It  should  be  reckoned  at  5  per  cent  or  more, 
$30,000,000  per  annum  at  least.  Not  a  farthing  of  this  $30,000,000  of 
saving  would  become  an  expense  on  the  banks. 

The  provision  in  the  Walker  bill  requiring  every  commercial  bank 
to  assume  its  equitable  and  proportionate  part  of  the  United  States 
notes,  according  to  its  actual  capital,  and  in  a  way  to  make  them  an 
advantage  to  the  banks,  is  only  one  incident  of  the  provisions  of  the 
Walker  bill.  It  is  necessary  during  the  period  of  transition  from  that 
of  their  present  isolated  condition  into  the  cooperative  system  provided 
for,  and  is  in  no  sense  essential  to  or  necessarily  a  part  of  the  Walker 
cooperative  scheme.  This  is  made  unequal  and  a  hardship  in  the  Hill- 
Fowler  bill.  They  are  so  small  in  the  amount  each  bank  is  required 
to  take  and  so  equitably  distributed  by  the  Walker  bill  as  to  be  an 
advantage  and  not  a  burden  to  any  one  bank,  as  the  banks  are  allowed 
to  issue  an  equal  amount  of  currency.  They  remain  as  now,  being 
issued  under  the  same  law  and  a  United  States  legal-tender  note,  while 
the  Hill-Fowler  bill  destroys  them.  The  Walker  bill  provides  for  their 
continued  existence  and  provides  for  their  equitable  annual  redistribu- 
tion among  all  commercial  banks  in  the  country  as  long  as  the  national 
banking  system  shall  last. 

ADVANTAGE  OF  A  NATIONAL  CLEARING  HOUSE. 

Did  the  New  York  clearing  house  or  the  national  clearing  house 
provided  for  in  the  Walker  bill  have  a  legal  existence,  it  would  not  be 
at  all  necessary  to  require  individual  banks  to  specifically  assume  any 
amount  of  particular  United  States  notes  in  the  cooperative  scheme 
provided  in  the  bill.     The  thorough  union  of  the  banks  and  incorporat- 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  163 

ing  the  clearing  houses  is  the  real  substance  of  the  Walker  hill.    Tin 
is  not  now  an  incorporated  clearing  house  in  the  country  to  deal  with 
in  a  banking  law. 

ONE   GOOD  THING  IN  THE  HILL-FOWLER  BILL. 

The  Hill-Fowler  bill  apparently,  but  not  actually,  disposes  of  the 
United  States  notes  in  something  of  the  same  method  as  the  Walker 
bill,  at  the  beginning,  in  devolving  the  United  States  notes  on  the 
hanks,  but  it  surely  and  absolutely  fails.  It  changes  the  essence  of  the 
present  legal-tender  United  States  notes  as  much  as  it  does  their  name 
and  equitable  distribution.  They  become  non  legal-tender  "national 
reserve  notes." 

The  Hill- Fowler  method  may,  at  first  glance,  look  like  the  Walker 
method,  but  they  certainly  are  as  different  in  essence  as  the  poisonous 
toadstool  from  the  nutritious  mushroom.  Its  method  of  distribution 
violates  the  principle  of  equity  as  between  new  banks  and  old  banks, 
in  devolving  them  upon  the  old  banks  in  the  beginning,  now  in  opera- 
tion, and  leaves  them  on  these  banks,  a  disproportionate  burdeu  for  all 
time  to  come. 

CURRENCY  NOT  LESS  THAN  $10. 

The  Hill-Fowler  bill  deprives  banks,  mostly  country  banks,  of 
$274,000,000  of  circulation  in  $5  notes  by  needlessly  forbidding  any 
bank  to  issue  any  currency  under  the  denomination  of  $10. 

Under  the  Walker  bdl  the  limit  is  $3  or  under,  practically  allowing 
no  bill  under  $5,  thus  allowing  a  circulation  by  banks  in  this  one  item 
$274,000,000  more  than  the  Hill-Fowler  bill,  and  reduces  rates  of 
interest  to  borrowers  as  $274,000,000  is  to  the  total  loans  by  banks. 

The  Hill-Fowler  bill  provides  a  currency  on  more  than  half  of  which 
the  rate  of  interest  on  loans  in  using  it  will  have  to  be  varied  every 
day  in  the  year  to  pay  the  same  dividend  on  the  stock  of  the  bank,  and 
the  issuing  and  withdrawal  of  which  will  be  governed  by  the  price  of 
United  States  bonds  in  the  market  and  the  time  they  run,  as  now,  and 
not  by  the  demands  of  business. 

The  Walker  bill  provides  a  currency  to  pay  the  same  dividends. 
The  interest  on  loans  in  the  use  of  it  will  be  the  same  every  day  in  the 
year. 

The  Hill-Fowler  bill  only  makes  room  for  its  bank  cur- 
rency in  addition  to  its  substitution  of  reserve  notes  for 
United  States  notes  by  retiring  gold  certificates $37, 000, 000 

National-bank  notes 227, 000, 000 

Total 204,000,000 

The  Walker  bill  pays  out  gold  for  United  States  notes. . .  140.  000,  000 

Gold  certificates  retired 37,  000,  000 

National-bank  notes  2i'7,  (too.  000 

Silver  dollars  in  reserves    200,  000,  000 

Five-dollar  notes,  forbidden  in  Hill-Fowler  bill 274,  000,  000 

Total 884,000,000 

$200,000,000  United  States  notes  are  to  remain  and  can  never  be 
destroyed. 


164  STRENGTHENING   THE    PUBLIC    CREDIT,  ETC. 

CURRENCY  CONDITIONS. 

The  Hill-Fowler  bill  changes  present  currency  conditions  by  a  very 
email  degree,  and  would  not  effect  a  reduction  of  interest  on  loans 
sufficient  to  enable  banks  to  be  formed  in  country  districts. 

The  Walker  bill  provides  for  such  a  change  as  to  allow  banks  to 
issue  "true  bank  currency,"  viz,  against  their  assets,  and  reduce  interest 
in  those  districts  from  one-third  to  one-half. 

Under  the  Hill-Fowler  bill  a  bank  of  $100,000  capital  will  have  to 
surrender  from  82.1,000  to  $40,000  of  its  capital  in  the  purchase  of  bonds 
as  a  license  fee  to  do  business,  when  it  commences  business 

The  Walker  bill  does  not  require  the  bank  to  become  a  bondholder 
by  a  single  dollar  in  order  to  do  business,  and  not  to  surrender  any 
part  of  its  capital,  excepting  in  case  of  insolvency. 

Under  the  Hill-Fowler  bill  the  Comptroller  can  not  know  what  the 
condition  of  a  bank  was,  as  shown  by  its  books,  on  any  given  day, 
excepting  the  days  on  which  the  "bank  examiner"  went  through  it. 

The  Walker  bill  provides  for  a  daily  report  of  its  condition  to  the 
Comptroller,  and  the  examiner  will  have  before  him  the  condition  of  the 
bank  on  every  day  to  verify  when  he  goes  to  the- bank. 

The  Hill-Fowler  bill  isolates  and  makes  peculiar  each  bank,  and  makes 
it  liable  itself  alone  to  be  called  upon  for  gold  for  every  note  it  issues  and 
by  every  banker  who  gets  one.  This  isolation  makes  it  unsafe  for  any 
bank  to  pioneer  in  the  system  even  if  it  would  be  safe  when  the  system 
was  in  full  operation,  which  it  is  not.  This  is  true  of  all  banks  that 
go  into  it  until  all  are  in,  and  then  the  country  bank  will  be  in  a  perilous 
condition. 

Under  the  Walker  bill  every  bank  is  absolutely  safe  during  the  tran- 
sition, as  the  condition  of  no  bank  entering  the  system  is  affected  in  its 
obligations  or  duties  until  a  given  time,  when  the  system  becomes 
instantly  in  full  operation. 

No  bank  that  enters  into  the  system  is  affected  by  the  provisions  of 
the  bill  until  all  commercial  banks  in  the  country  come  under  its 
provisions. 

Immediately  upon  that  event,  existing  United  States  notes  assumed 
by  any  bank  lose  their  identity  so  far  as  they  belong  to  any  particular 
bank  that  has  its  name  printed  on  the  back  of  them  as  responsible  for 
their  current  or  ultimate  redemption,  gold  being  massed  in  the  national 
clearing  house  to  redeem  all  of  them. 

They  are  then  to  the  bank  as  the  gold  they  hold,  only  appearing  with 
gold  in  their  cash  reserves. 

CHARACTER  OF  NOTES. 

The  Hill-Fowler  bill  not  only  compels  the  bank  to  buy  "national 
reserve  notes"  of  the  Government  (strictly  a  bank  note)  and  pay  United 
States  notes  for  them,  which  provision  may  put  them  at  a  premium,  but 
it  requires  the  bank  to  put  up  a  5  per  cent  gold  current  redemption  fund 
for  them,  so  the  bank  only  gets  $05  for  every  $100  it  pays  out. 

The  Walker  bill  keeps  the  identity  of  the  present  greenbacks  and 
only  prints  the  notes  of  the  bank  on  the  back  of  the  identical  green- 
back. It  allows  the  banks  to  give  nearly  every  kind  of  money  for 
them  excepting  bank  bills.  All  money  can  not  be  "cornered,"  as  United 
States  notes.  The  Walker  bill  requires  the  Government  itself  to  put  up 
the  5  per  cent  current  redemption  for  its  own  notes.  Thus  the  bank 
gets  $100  legal- tender  money  in  exchange  for  each  $100  it  pays  in. 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  165 

The  Hill-Fowler  bill  continues  the  present  law  forbidding  banks 
onder  any  circumstances  to  use  their  "reserves"  for  the  very  purposes 
for  which  they  are  kept. 

The  Walker  bill  permits  banks  to  use  their  "reserves"  iu  any  legiti- 
mate way. 

Under  the  Hill-Fowler  bill,  as  under  the  present  law,  every  operation 
of  the  Treasury  would  expand  or  contract  the  currency  to  the  serious 
injury  of  the  business  of  the  country.  Witness  the  outcry  all  over  the 
country  that  the  Treasury  is  contracting  the  currency  and  injuring 
business  in  collecting  the  pay  on  any  debt  due  the  Government. 

Under  the  Walker  bill  whatever  sum  the  Treasury  had  or  failed  to 
have  available,  would  not  affect  the  volume  of  the  currency  of  the 
country  by  the  smallest  fraction.  It  would  be  in  the  national  clearing 
house  where  the  people  could  use  it. 

Under  the  Hill-Fowler  bill,  as  under  the  present  law,  national-bank 
eurrency  notes,  which  are  certilicates  of  deposit  and  the  people's 
money,  are  a  freak  money.  They  are  forced  out  of  circulation  when 
the  credit  of  the  Government  is  best,  business  most  active,  and  the 
people  need  the  most  money;  they  are  forced  into  circulation  by  the 
banks  when  the  people  do  not  need  them  and  can  not  use  them,  and 
the  Government  is  distressed,  as  in  1S!>3  and  1894. 

Under  the  Walker  bill  it  would  be  for  the  interest  of  the  banks  to 
issue  the  most  money  when  the  people  needed  it,  and  to  just  as  large 
an  amount  as  the  people  could  use.  The  competition  between  banks  in 
forcing  it  out  will  make  it  just  as  cheap  as  money  can  possibly  be  issued 
under  any  system  and  kept  "good"  and  honestly  used  by  the  people, 
and  when  they  most  need  it.  That  part  and  only  that  part  of  the  cur- 
rency which  the  people  can  not  profitably  use  will  be  forced  back  to  the 
banks. 

Under  the  Hill-Fowler  bill,  as  under  the  present  law,  the  United 
Slates  will  have  the  highest  interest  rates  in  the  most  expensive  cur- 
rency system  of  any  first-class  nation. 

LOW  INTEREST   UNDER   THE  WALKER  BILL. 

Under  the  Walker  bill  interest  on  loans  will  be  as  low,  and  this  all 
over  the  country,  as  anywhere  in  the  world.  Gurrency  will  be  issued  to 
the  i  leople  by  the  Government,  not  at  2  per  cent  interest,  as  the  Populists 
want,  but  for  nothing,  to  any  five  persons  that  get  together  capital 
enough  to  guarantee  the  safety  of  the  currency  they  take  and  to  the 
amount  of  their  combined  capital,  as  is  done  in  every  country,  the  Uniied 
States  alone  excepted. 

BOARD   OF   ADVISERS. 

Under  the  Hill  Fowler  bill,  as  under  the  present  law,  there  is  no  way 
for  the  Secretary  of  the  Treasury  to  avail  himself  of  the  expert  assist- 
ance that  is  absolutely  necessary  to  him  to  properly  discharge  his  duties, 
and  that  every  banker  in  the  country  has  in  his  board  of  directors  his 
clearing-house  committee  and  banking  associates,  etc.  To-day,  if  the 
Secretary  seeks  any  advice  he  thereby  inaugurates  a  panic — the  very 
panic  he  may  be  seeking  to  avert. 

Under  the  Walker  bill  the  reverse  is  true.  It  provides  for  the  assist- 
ance of  the  Gomptroller,  nominally,  but  really  for  the  Secretary  oi  the 
Treasury,  a  board  of  seven  men — men  who  have  risen  to  the  very  highest 
eminence  in  their  profession.    They  have  not  attained  to  their  places 


166  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

by  favor,  but  have  conquered  them  by  bard,  diligent,  continuous  work 
for  years.  Their  position  at  the  head  of  the  greatest  financial  institu- 
tion of  the  world,  developed  in  the  Walker  bill,  uot  by  appointment, 
but  by  conquest,  will  place  them  in  a  position  not  only  equal  to  that  of 
the  directors  of  the  Bank  of  England,  but  far  above  them. 

Their  attainments  will  rank  in  finance  and  banking  with  the  justices 
of  the  Supreme  Court  of  the  United  States  in  law.  Their  salaries  will 
come  to  them  naturally,  as  their  duties  are  met,  and  from  the  banks,  not 
from  the  United  States  Treasury. 

The  prizes  for  party  workers  provided  in  the  Hill-Fowler  bill,  at  an 
expense  of  §23,000  to  the  Treasury  in  the  triple-headed  Comptroller, 
make  more  conspicuous  by  contrast  the  excellence  of  the  provision  in 
the  Walker  bill  for  this  board  of  advisers.  In  the  Walker  bill  the  in- 
terests of  the  plain  people  of  the  country  find  protection  in  the  hands 
of  their  special  representatives,  viz,  the  President,  Secretary  of  the 
Treasury,  and  Comptroller  of  the  Currency,  who  are  given  ultimate 
control.  On  the  other  hand,  the  highest  efficiency  and  economy  of 
service  are  secured  to  the  banks  by  their  officers  and  by  the  board  of 
advisers. 

PROTECTION  OF  GOLD  RESERVES. 

The  Hill-Fowler  bill  affords  no  chance  to  the  United  States  Treasury 
or  to  banks  to  protect  its  gold  by  banking  methods,  while  united  banks 
can  protect  themselves  surely  and  safely. 

The  Walker  bill  affords  banks  the  same  chance  to  protect  themselves 
against  unreasonable  depletion  of  their  gold  as  the  banks  of  France,  of 
Germany,  of  England,  and  other  countries  do.  Under  it  no  call  for 
gold  under  any  circumstances  can  be  made  on  the  United  States  Treas- 
ury. It  would  be  of  as  much  indifference  to  the  country  what  the 
Government  paid  out  as  what  John  Jones,  Sam  Smith,  or  anyone  else 
paid  out. 

The  Hill-Fowler  bill  provides  no  way  of  ending  the  liability  of  the 
United  States  Treasury  to  furnish  to  anyone  demanding  it  all  the  gold 
needed  by  banks,  or  by  domestic  or  foreign  brokers,  for  speculation  or 
to  ship  abroad. 

The  Walker  bill  ends  it  the  day  it  goes  into  operation. 

NO  RELIEF  TO  THE   TREASURY  BY  THE  HILL-FOWLER  BILL. 

The  Hill-Fowler  bill  holds  out  no  inducement  in  any  form  for  the 
banks  to  assist  in  relieving  the  United  States  Treasury  of  the  current 
redemption  of  one  dollar  of  United  States  notes  in  addition  to  the  amount 
their  bill  forces  them  to  take,  viz,  $157,872,024— less  than  half  of  them. 

The  Walker  bill,  in  addition  to  what  it  requires  banks  to  take,  has  so 
large  an  inducement  to  banks  to  assume  them  and  wholly  and  immedi- 
ately relieve  the  Treasury  of  all  of  them,  in  allowing  banks  to  issue  an 
amount  of  currency  equal  to  the  amount  of  United  States  notes  they 
assume  the  current  redemption  of,  that  the  banks  are  restricted  by  the 
bill  in  the  amount  they  can  take. 

PROTECTING  REDEMPTION   GOLD. 

The  Hill-Fowler  bill,  in  full  operation,  makes  the  isolated  and  helpless 
country  banks  furnish  to  the  isolated  but  powerful  city  banks  not  only 
all  the  gold  they  need  but  all  the  gold  needed  in  the  whole  system. 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  1  b' 7 

The  country  banks,  in  turn,  would  demand  the  gold  they  needed  of  the 
United  States  Treasury,  making  conditions  worse  than  now — in  the  city 
banks  putting  the  country  hanks  between  them  and  disaster,  while  now 
the  city  bankers  or  brokers,  or  foreign  brokers  wanting  gold  to  ship,  go 
straight  to  the  Treasury  and  not  to  city  banks  or  country  banks. 

The  Walker  bill  combines  all  the  commercial  banks  in  the  country 
into  one  whole  to  furnish  gold  ami  maintain  "parity,"  and  masses  all 
the  gold  in  the  country  in  two  or  three  centers  of  trade  to  protect  each 
and  every  bank  with  these  masses  of  gold  coin. 

The  Hill-Fowler  bill  compels  the  division  of  gold  in  3,000  to  10,000 
small  parcels  and  the  isolation  of  a  little  gold  in  each  bank.  Kach  bank 
is  required  to  keep  its  gold  in  its  own  vault  for  itself  alone  and  redeem 
its  own  notes  in  gold  only.  The  country  bank  can  not,  in  the  nature 
of  the  case,  keep  enough  gold  to  protect  itself  against  a  senseless  scare 
among  its  customers  or  from  being  blackmailed  by  any  powerful  bank, 
broker,  or  any  operator,  either  for  revenge  or  for  pelf. 

The  Walker  bill  compels  all  the  banks  to  combine  to  maintain  parity 
and  to  protect  the  gold  of  each  solvent  bank. 

CLEARING-HOUSE   CONDITIONS. 

The  Hill-Fowler  bill  requires  as  for  twelve  years,  from  1870  to  1801, 
the  United  States  Treasury  to  take  all  the  risk  and  be  at  all  the 
expense  of  the  clearing-house  system  and  the  current  gold  redemption 
of  legal-tender  and  Treasury  notes.  Then,  and  it  will  be  the  same  again, 
confidence  could  not  be  maintained  in  such  empirical  practices  without 
a  surplus  in  the  Treasury  as  large  as  was  then  held — hundreds  of  mil- 
lions, a  large  part  of  it  in  gold.  In  every  other  country  in  the  world  the 
banks  are  required  to  assist  and  sustain  the  Government.  The  Hill- 
Fowler  bill  would,  as  now,  compel  the  Government  to  support  the  banks. 

Under  the  Walker  bill  the  United  States  Treasury  would  only  touch 
the  national  clearing  house  as  a  fiscal  agent  and  depository  of  public 
moneys,  having  as  a  guaranty  of  the  safety  of  such  deposits  the  whole 
$2,000,000,000  of  cash  reserves  and  banking  capital  of  the  country  as  a 
guaranty  fund  for  its  payment  by  the  national  clearing  house.  The 
Treasury  could  in  no  event  incur  any  loss  or  be  put  to  any  expense,  as 
it  would  be  the  only  depositor  of  money  in  that  association.  Except 
in  the  Walker  bill,  or  its  equivalent,  there  is  no  possible  way  of  avoiding 
the  continuance  of  enormous  loss  to  the  people. 

It  provides  a  more  effective  and  far  safer  connection  of  the  Treasury 
of  the  United  States  with  the  principal  banking  clearing  house  in 
the  country,  and  relieves  the  United  States  Treasury  from  taking  all 
the  risks  and  being  subject  to  all  the  losses  that  are  involved  in  the 
clearing-house  business  of  the  country,  which  risk  it  carried  from 
the  resumption  of  specie  payments  in  1870  to  about  the  middle  of  L891, 
at  an  expense  to  the  people,  incurred  in  taxation,  of  about  $12,000,000 
a  year. 

The  Hill-Fowler  bill  contemplates  the  continued  use  of  theXew  York 
clearing-house  certificates,  which  are  sure  to  prove  at  some  time  a  most 
dangerous  and  unsatisfactory  emergency  currency,  as  compared  with 
legal  tender  currency,  to  all  excepting  the  banks  which  compose  it. 
Banks  in  other  parts  of  the  country  have  already  been  brought  into 
very  great  peril  by  their  use. 

Under  the  Walker  bill  United  States  legal  tender  notes  are  the  emer- 
gency currency  issued  to  allay  panics.  Their  advantage  over  "bank 
currency,"  as  emergency  money,  is  incalculable. 


168       STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 

OPFICE  OF  THE  COMPTROLLER  OF  THE  CURRENCY. 

The  Hill-Fowler  bill  abolishes  the  office  of  Comptroller  of  the  Cur- 
rency and  creates  a  "triple-headed"  executive  department,  thus  violat- 
ing every  principle  of  prompt,  efficient,  and  responsible  executive  action 
in  the  head  of  affairs,  and  still  further  by  limiting  their  terms  of  office. 
It  perpetuates  this  gross  injury  to  the  service  at  an  increased  expense 
of  820,000. 

Under  the  Walker  bill  the  office  of  the  Comptroller  of  the  Currency 
remains  as  now,  excepting  the  Comptroller  is  made  many  times  more 

efficient. 

The  Hill-Fowler  bill  assumes  that  a  whole  community  can  be  arrested, 
tried,  and  punished,  in  providing  that  every  bank  in  the  country  shall 
be  put  in  liquidation  immediately,  if  gold  payments  are  suspended  by 
banks,  for  any  cause,  or  for  any  time,  longer  or  shorter.  If  au  earth- 
quake occurs  in  Charleston,  S.  C,  the  whole  city  shall  be  razed  to  the 
ground,  because  earthquakes  thereafter  may  be  normal  to  it.  Such 
extravagant  remedies  overreach  themselves,  and  are  equivalent  to  no 
opposition  to  the  thing  deprecated,  and  no  penalty  at  all. 

Under  the  Walker  bill  a  penalty  tax  of  one-half  of  1  per  cent  on 
deposits  in  all  commercial  banks,  amounting  to  $13,401,836  per  annum, 
is  imposed  during  the  default. 

CURRENT  REDEMPTION. 

The  Hill-Fowler  bill  provides  the  most  cumbersome,  expensive,  annoy- 
ing, and  impracticable  machinery  for  the  current  redemption  of  the  three 
kinds  of  bank  currency  it  creates  that  could  be  devised,  and  it  makes 
it  so  inflexible  by  legal  provisions  with  one  class  of  notes  redeemed  in 
one  manner  and  two  kinds  in  another  place  and  manner,  as  to  create 
endless  confusion. 

It  provides  for  the  division  of  the  United  States  into  territorial  "  cur- 
rent redemption  districts."  This  division  of  the  country  into  redemp- 
tion sections  is  made  to  apply  to  only  one  of  the  three  kinds  of  bank- 
currency  notes  provided  for  in  the  bill—"  national  currency  notes."  It 
also  provides  that  these  notes  shall  be  redeemed  m  one  way  and  at  one 
place,  and  the  "  national-bank  notes"  and  the  "national-reserve  notes" 
shall  be  redeemed  in  another  way  and  at  another  place— and  much  more 
of  the  same  sort. 

It  makes  all  three  kinds  of  its  bank  notes  a  legal  tender  between 
banks,  but  provides  that  no  bank  shall  pay  over  its  counter  on  a  check, 
etc.,  to  a  citizen  or  to  other  banks  a  "  national-currency  note"  if  the 
note  is  not  in  the  same  district  that  the  bank  issuing  it  is  located  in, 
unless  its  redemption  in  that  district  is  provided  for. 

Territorial  divisions  rigidly  fixed  and  the  notes  to  be  issued  in  that 
division  to  be  made  for  that  division  only,  is  as  impracticable  as  to 
restrict  the  mail  service  of  the  country  in  the  same  way. 

I  nder  the  Walker  bill  the  banks  are  simply  required  to  "do  the 
tiling,"  and  left  absolutely  free  to  do  it  in  the  cheapest,  quickest,  and 
safest  way  possible— in  any  way  satisfactory  to  them  and  agreeable  to 
the  Comptroller.  It  is  for  them  to  decide  and  to  change  the  way  and 
place  as  often  as  a  new  railway,  turnpike,  or  city  road  is  built,  or  one 
town  outstrips  its  rival.  Banks  must  vary  from  time  to  time  their  ways 
of  doing,  in  the  nature  of  the  case,  always  subject  to  the  approval  of 
the  Comptr  dler. 


STRENGTHENING  THE  PUBLIC  CREDIT,  ETC.       169 

Under  the  Walker  bill  the  one  kind  of  bank  note  provided  for,  paid 
out  by  any  bank  anywhere  will  naturally,  immediately,  and  instantly, 
after  it  has  done  its  work,  find  its  way  back  to  the  bank  that  issues  it 
as  a  letter  dropped  in  the  post-office  in  any  hamlet  finds  its  way  to  its 
destination.  Each  bank  bill  will  find  its  way  back  to  the  bank  that 
issues  it  in  precisely  the  same  way  and  in  the  same  package  with  the 
check,  draft,  bill  of  exchange,  or  other  money  obligation  issued  by  the 
same  bank  after  it  or  they  have  done  their  work  and  at  a  tithe  of 
the  expense  in  time  and  money  of  the  Hill-Fowler  plan.  It  never  will 
occur  to  anyone  to  ask  what  they  are  redeemed  in.  They  will  be 
redeemed  in  "  bank  funds"  that  all  banks  agree  on  and  that  maintain 
parity,  or  all  banks  will  incur  the  penalty  tax. 


UNREASONABLE   USE   OP   GOLD   IN   HILL-FOWLER  BILL. 

The  framers  of  the  Hill-Fowler  bill  see  only  gold  in  our  monetary 
system.  They  see  little  in  it  to  preserve  to  the  people  who  made  it. 
They  do  not  hesitate  to  assume  the  duties  and  exercise  the  right  of  the 
Committee  on  Coinage,  Weights,  and  Measures.  They  demonetize  sil- 
ver. They  destroy  the  United  States  legal-tender  notes.  They  reverse 
the  policy  of  the  country,  not  only  as  to  gold  and  silver,  but  as  to  paper 
money,  adding  two  more  kinds  to  the  present  bank-note  money. 

They  remove  the  guarantee  of  the  Government  from  a  large  part  of 
the  bank  money  used  by  the  people.  There  is  not  the  slightest  excuse 
for  such  radical  measures. 

In  the  Walker  bill  there  can  not  be  found  a  section,  a  paragraph,  a 
clause,  a  line,  or  a  word  that  makes  the  slightest  discrimination  between 
any  two  of  the  various  forms  of  our  coin  and  paper  money,  gold,  silver, 
United  States  notes,  Treasury  notes,  bank  notes,  etc. 

Its  author  sought  only  one  end,  viz,  to  compose  the  ills  and  to  correct 
the  injustice  in  existing  conditions,  created  by  law,  and  in  doing  so  not 
to  unnecessarily  antagonize  the  views  of  a  single  citizen  in  the  whole 
country. 

VISIBLE   GOLD. 

There  was  in  the  country  "visible  gold"  (that  is  to  say,  besides  all  the 
gold  in  private  hoards  and  in  the  pockets  of  the  people)  in  banks,  in 
the  United  States  Treasury,  etc.,  in  1890,  $421,236,388.  It  lias  increased 
since  to  nearly  $(500,000,000.  Not  a  dollar  of  these  millions  of  gold  was 
available  to  our  banking  and  currency  system  excepting  that  in  the 
United  States  Treasury,  and  no  one  is  responsible  for  "maintaining 
parity"  but  the  Treasury.  We  have  more  gold  in  proportion  to  our 
requirements  than  any  other  country,  only  a  fraction  of  it  in  touch  to 
keep  the  parity  of  our  $1,000,000,000  currency. 

The  Hill-Fowler  bill  continues  the  same  inexcusable  policy  and  aggra- 
vates it.  It  requires  an  immense  amount  of  gold,  but  still  leaves  the 
United  States  Treasury  ultimately  responsible  for  maintaining  "parity" 
and  to  furnish  to  banks  all  the  gold  they  demand  of  it. 

The  bill  requires  the  banks  to  carry  one  half  the  cash 

leserve  required  in  gold $111,  000.  000 

The  United  States  Treasury  to  carry 136, 000.  000 

Unvarying  total  amount  required 1*80,  000,  000 

Treating  silver  and  United  States  notes  simply  as  currency,  it 
requires  the  banks  to  redeem  their  notes  in  gold  on  demand. 


•170  STRENGTHENING   THE    PUBLIC    CREDIT,    ETC. 

The  allowing  the  use  of  "national  reserve  notes"  in  redemption  is 
only  nominal.  Each  bank  stands  alone  to  redeem  in  gold  its  notes. 
Assuming  that  country  banks  will  take  out  GO  per  cent  of  currency  to 
capital,  it  works  out  in  this  way: 

The  reserve  city  banks  keeping  50  per  cent  of  this  required 

cash  reserve  in  gold  and  on  notes  will  keep  in  gold $119,  282, 035 

Country  banks,  50  per  cent  of  cash  in  gold 27, 466, 179 

Country  banks,  on  $267,913,749  bank  notes,  5  per  cent  in 

gold 13, 395, 687 

Total  of 160, 143, 901 

As  currency  and  deposits  are  identical,  this  is  equivalent  to  requiring 
51.2  per  cent  of  cash  reserve  in  city  banks  to  be  in  gold  and  an  equiva- 
lent of  74.3  per  cent  of  the  cash  in  the  country  banks  to  be  in  gold. 
The  $13,395,087  fund  to  be  kept  in  the  United  States  Treasury. 

HILL-FOWLER  BILL  FAVORS   CITY  BANKS. 

The  city  banks  will  escape  all  responsibility  for  maintaining  "parity," 
for  they  will  take  out  no  currency.  They  will  keep  the  "  national 
reserve  notes"  they  are  required  to  take  in  their  "cash  reserve," 
changing  them  with  each  other  for  that  purpose,  the  national  reserve 
notes  required  in  the  central  reserve  cities  being  only  12  per  cent  to 
their  cash  reserve,  in  all  other  reserve  cities  only  53  per  cent  to  their 
cash  reserve.  Not  a  dollar  of  their  notes  will  ever  be  presented  to  the 
"gold  current  redemption  fund"  to  draw  out  one  dollar  of  gold. 

On  the  other  hand,  the  national  reserve  notes  country  banks  are 
required  to  take,  being  182.6  per  cent  to  their  cash  reserve,  and  the 
amount  of  bonds  they  are  required  to  take  for  "national  bank  notes," 
will  make  335.2  per  cent  to  their  cash  reserve,  they  can  use  only  14.3 
per  cent  of  these  notes  in  their  cash  reserve.  They  will  therefore  be 
compelled  to  "pay  out"  all  the  balance,  the  whole  equaling  about 
$158,000,000,  besides  the  $100,000,000  bank  notes. 

Under  the  old  Suffolk  system  the  total  currency  used  averaged  to  be 
redeemed  five  times  a  year. 

CURRENCY  FLOWS  TO  COMMERCIAL  CENTERS. 

All  currency  flows  to  the  commercial  centers,  to  be  returned  to  the 
country  banks  through  "current  redemption."  The  bill  compels  every 
dollar  of  this  $158,000,000  each  time  it  is  presented  for  redemption  to 
be  paid  in  gold.  It  puts  the  gold  redemption  fund  outside  of  banks 
and  into  the  United  States  subtreasury.  This  is  done  to  make  sure 
that  the  mandate  of  the  law  compelling  actual  gold  redemption  is 
obeyed.    The  actual  gold  or  gold  drafts  must  be  used  in  redeeming  it. 

Five  times  a  year  on  $158,000,000  makes  about  $70,000,000  of  gold  a 
month  used  in  redemption  and  constantly  flowing  from  country  banks 
into  city  banks ;  $800,000,000  each  year  if  only  $158,000,000  of  national- 
bank  currency  and  national-reserve  currency  is  used. 

How  do  you  like  this  bill,  wholly  in  the  interest  of  the  city  banks? 
Will  a  bank  ever  be  organized  under  it? 

Where  are  the  country  banks  to  get  their  gold?  Out  of  the  United 
States  Treasury?  How  is  the  Treasury  to  get  this  gold?  Of  course 
the  city  banks  will  kindly  hand  it  over  to  the  Government  in  pleasant 
times,  when  everything  is  balmy.    How  when  it  storms  ?    How  about 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  171 

1803?  How  about  another  Cleveland-Carlisle  administration?  It  is 
as  sure  to  come  as  history  is  to  repeat  itself.  Sell  bonds,  of  eoiusc! 
Bell  $163,000,000  bonds  at  a  loss  of  $40,000,000,  as  Cleveland  did,  or 
$1,000,000,(100,  and  just  as  many  as  unscrupulous  bants  or  foreign 
brokers  may  determine. 

The  Bill-Fowler  bill  leaves  the  United  States  Treasury  absolutely 
unprotected,  the  sport  of  the  most  unscrupulous  money  changers  and 
gold  brokers  that  can  be  found  anywhere  in  the  world. 

A  cablegram  costs  but  little.  The  door  of  the  United  States  Treasury 
opens,  for  the  delivery  of  gold,  into  every  European  broker's  ollice — 
Israelite  or  Christian. 

PROBLEM  OF   SILVER   REDEMPTION. 

But  one  of  the  most  remarkable  hallucinations  developed  in  the  bill  is 
the  belief  that  with  $500,000,000  silver  in  circulation,  averaging  to  pass 
through  banks  in  deposits  from  traders  five  times  a  year,  or  $200,000,000 
a  month,  the  people  will  pay  the  traders  in  certificates  or  in  coin.  If 
the  banks  can  not  get  them  to  present  to  the  United  States  Treasury 
for  gold,  all  existing  banking  customs  must  be  reversed.  Kemember, 
the  bill  demonetizes  silver  dollars  and  provides  for  their  gold  redemp- 
tion at  the  Treasury.  It  provides  only  $25,000,000  gold,  and  that  the 
Treasury  must  keep  good,  to  redeem  in  gold  all  silver  presented  to  it. 
The  only  way  the  country  bank  can  get  the  gold  to  make  the  compul- 
sory gold  redemption  of  the  circulating  notes  is  to  get  it  out  of  the 
United  States  Treasury  or  beg  it  of  the  city  banks.  Problem:  With 
$25,000,000  gold  stock  in  the  Treasury  to  redeem  $200,000,000  a  month 
of  silver,  how  many  bonds  must  the  Treasury  sell  per  month  to  do  it? 
Or,  how  much  gold  must  it  buy  directly  or  indirectly  of  the  banks? 
Or,  how  will  it  run  the  New  York  clearing  house  as  an  adjunct  to  the 
United  States  Treasury?  How  long  will  Andrew  Jackson  lie  quietly 
in  his  grave,  or  who  cares  whether  he  lies  quietly  or  uneasily? 

ASSUMING  UNITED  STATES  NOTES. 

Under  the  Walker  bill  not  one  of  the  present  unjust  or  objectionable 
banking  or  Treasury  conditions  will  remain.  The  city  bank  will  have  to 
assume  the  current  redemption  of  United  States  legal-tender  notes 
equal  to  12£  per  cent  of  its  actual  capital,  and  the  strictly  country 
bank,  just  formed,  124  per  cent  of  them  to  actual  capital. 

The  central  reserve  city  bank  will  not  be  let  off  with  buying  2.4  per 
cent  to  its  actual  capital  of  bonds  and  12.8  percent  of  national  reserve 
notes,  and  the  new  country  bank  have  to  buy  25  per  cent  of  both,  as 
in  the  Hill-Fowler  bill,  and  the  othei  central  reserve  cities  only  5.5  per 
cent  of  bonds  and  also  of  16.5  per  cent  of  national  reserve  notes  to  new 
banks  25  per  cent  of  both  bonds  and  notes.  It  requires  no  bonds 
whatever,  and  serves  every  bank  alike. 

The  Hill-Fowler  bill  provides  for  the  disposition  of  only  $157,872,000 
United  States  notes  by  banks.  It  only  requires  the  taking  of  them  by 
national  banks.  It  holds  out  not  the  slightest  inducement  for  banks 
to  assume  one  dollar  of  them  more  than  the  law  compels  them  to  take. 

The  Walker  bill  requires  all  commercial  banks,  national  and  State,  to 
assume  an  amount  equal  to  12.j  per  cent  of  their  actual  capital,  which 
would  dispose  of  $108,071,000.  From  paying  out  the  Treasury  gold 
$140,000,000  would  be  disposed  of.  The  losses  are  estimated  at 
$12,000,000,  leaving  a  balance  of  only  $20,000,000  for  banks  to  assume. 


172  STRENGTHENING   THE    PUBLIC    CREDIT,  ETC. 

The  Walker  bill  allows  banks  to  issue  currency  against  their  assets 
at  once  for  every  dollar  of  United  States  notes  they  assume.  This 
inducement  is  so  great,  that  among  the  six  thousand  State  and  national 
banks  and  new  banks  there  would  be  found  enough  to  immediately 
take  up  many  times  this  amount. 

The  Walker  bill  immediately  adjusts  the  holding  of  United  States 
notes  among  all  banks,  so  that  any  bank  having  an  excess  will  be 
relieved  of  the  excess  immediately — as  soon  as  any  bank  is  in  the 
system. 

The  Hill-Fowler  bill  provides  no  protection  to  the  specie  of  any  single 
bank.  Any  excitement  in  its  neighborhood  is  liable  to  wreck  the  most 
solvent  isolated  single  bank. 

Under  the  Walker  bill,  the  gold  of  all  the  banks  is  massed  to  defend 
the  gold  of  each  individual  bank,  by  the  combination  of  all  banks,  so 
that  no  "  run  "could  possibly  be  made  on  anyone  bank,  and  all  the 
banks  combined  are  too  strong  to  meddle  with. 

HILL-FOWLER  BILL  UNFAIR  TO   COUNTRY  BANKS. 

The  unfairness  of  the  Hill-Fowler  bill  as  between  city  banks  and 
country  banks  is  further  illustrated  by  the  percentage  of  bonds  to 
their  actual  capital  each  is  required  to  buy.  The  bill  is  carefully  drawn 
in  the  interest  of  banks  that  are  interested  in  speculation  in  bonds  as 
much  as  it  is  in  the  interest  of  banks  faithfully  serving  their  business 
customers. 

It  requires  of  the  central  reserve  city  banks,  as  a  license  fee  to  do  a 
banking  business,  the  buying  of  United  States  bonds  to  the  amount  of 
2.4  per  cent  of  tbeir  actual  capital.  Newly  formed  banks  must  buy 
bonds  to  the  amount  of  25  per  cent  of  their  capital.  Other  reserve 
cities  the  amount  of  5.5  per  cent  of  their  actual  capital,  against  25  per 
cent  of  capital  of  banks  newly  formed. 

This  bill  would  not  have  gotten  out  of  the  committee  if  it  had  not  been 
so  drawn  as  to  meet  the  wishes  of  those  who  were  determined  that  no 
bill  should  be  reported  that  did  not  first  of  all  protect  this  bond  privi- 
lege to  banks,  and  this  to  the  sacrifice  of  the  legitimate  commercial 
bank,  and  of  the  advantages  of  a  true  bank  currency. 

Banks  that  bought  bonds  at  80  to  90  cents  on  the  dollar  of  their  value 
in  prosperous  times  must  have  preserved  to  them  the  privilege  of  tak- 
ing out  currency  on  the  bonds  while  waiting  for  the  10  to  L'O  per  cent 
profit,  that  they  may  loan  the  currency  they  take  on  these  bonds  to 
country  districts  that  are  prohibited  from  having  their  own  banking 
funds  by  the  national  law.  And  this  to  add  to  the  profits  of  banks  in 
speculating  in  bonds  or  still  more  to  favor  banks  in  localities  which 
have  an  excess  of  banking  funds  for  commercial  uses  and  are  investing 
them  in  bonds. 

BRANCH  BANKS. 

The  Hill-Fowler  bill  authorization  of  branch  banks  is  very  bad 
economics  as  compared  with  encouraging  the  local  independent  bank, 
and  still  worse  statesmanship. 

It  linds  no  justification  in  the  policy  of  our  free  banking  system  or 
in  any  amendment  of  it  proposed  in  this  bill. 

It  is  unwise  to  permit  powerful  city  banks  to  establish  branches  in 
places  of  4,000  inhabitants  or  less.  The  putting  its  local  agent  in  a 
place  with  no  interest  in  it  other  than  the  money  he  can  make  out  of  it 
for  his  nonresident  employer,  means  that  no  independent  local  bank, 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  173 

managed  by  its  citizens,  can  be  established  in  the  town,  and  if  one  is 
there  it  must  go  out  of  business. 

In  nine  cases  out  of  ten  local  banks  in  towns  are  formed  by  public 
spirited  citizens  to  get  a  fair  return  on  the  capital  they  put  in  the  bank', 
but  still  more  to  build  up  the  town,  by  assisting  other  citizens  to 
capital  with  which  to  do  their  business. 

The  agent  of  the  city  bank  may  for  a  time  loan  money,  in  "good 
times,"  at  rates  to  drive  out  the  country  bank,  and  in   times  of  strin 
gency  the  funds  with  this  country  agent  will  be  sure  to  be  immediately 
returned  to  support  the  city  bank.     The  customers  of  the  country 
agency  will  be  sacrificed  to  the  necessities  of  the  parent  bank. 

Generally  there  are  two  stores  in  a  town.  Jn  times  of  excitement 
each  is  the  headquarters  of  one  political  party.  The  agent  of  the  parent 
bank  knows  the  politics  of  his  city  employer,  and  again  the  bestowal  of 
his  favors  is  liable  to  be  influenced  by  his  own  politics. 

But  our  choice  must  be  made  between  one  great  "United  States 
Bank  "  with  ten  thousand  branches,  and  ou  the  other  hand  ten  thou- 
sand independent  local  banks,  united  together,  that  all  in  union  may 
support  each,  and  thus  all  together  make  each  secure  in  times  of 
Stringency  or  in  threatened  or  actual  panic,  as  in  the  Walker  bill. 

There  is  no  possible  relief  of  the  Treasury  condition  or  any  other 
way  of  saving  to  the  people  a  loss  now  made  of  $50,000,000  to 
$00,000,000  annually  in  excessive  interest  charges.  It  can  not  be  done 
by  the  isolated  banks  of  the  Hill-Fowler  bill. 

INDEPENDENT  LOCAL  BANKS. 

Under  the  Walker  bill  independent  banks  will  be  formed  in  every 
considerable  town  by  its  leading  citizens  and  in  the  immediate  future. 

Each  bank  will  necessarily  have  in  its  direction  the  two  storekeepers. 
It  will  necessarily  have  Republicans,  Democrats,  and  Populists  in  its 
management.  There  are  not  enough  men  in  either  party  alone  so  situ- 
ated as  to  maintain  the  bank. 

The  four  chief  agents  in  civilization  are  the  home,  the  church,  the 
school,  and  the  bank.  To-day  every  man,  rich  or  restricted  in  his 
means — merchant,  manufacturer,  farmer,  or  what  not — must  at  times 
have  more  or  less  assistance  with  money  borrowed  of  banks,  or  suffer 
great  loss  in  lower  prices  for  his  products  or  shrinkage  of  value  of  his 
property.  Millions  are  thus  lost  every  year  by  farmers  and  others  in 
the  United  States  because  banks  can  not  live  in  country  districts  under 
the  law  as  it  now  is. 

But  still  more  the  bank  is  the  greatest  instrument  of  substantial 
progress,  in  helping  forward  wise  schemes  and  advising  against  the 
unwise. 

It  is  in  the  directors'  room  of  the  country  bank  that  talk  never  ceases 
as  to  how  the  progress  of  a  town  can  be  secured,  property  be  made  to 
increase  in  value,  and  a  greater  home  market  for  the  products  of  the 
farm  secured;  better  and  cheaper  freight  rates,  better  markets  every- 
where for  the  home,  shop,  and  factory;  better  county  roads;  a  gas 
plant;  better  country  and  town  buildings;  better  schoolhouses,  better 
church  edifices,  better  everything.  When  five  or  more  reputable 
citizens  of  a  town  get  their  capital  together  to  form  a  bank,  it  means 
that  the  town  must  take  on  new  life  and  every  citizen  of  the  town  will 
be  more  enterprising  and  successful. 

In  the  bank  not  only  all  theories  of  coinage,  paper  money,  credit,  and 
business  methods  are  discussed  by  the  directors  and  officers  of  the 


174  STRENGTHENING   THE    PUBLIC    CREDIT,  ETC. 

bank,  but  by  every  business  man  and  farmer  in  the  neighborhood — by 
every  man  who  goes  into  the  bank — not  only  discussed,  but  tested  in 
practice. 

The  Walker  bill  conserves  and  magnifies  all  tbese  forces  for  good  in 
encouraging  the  formation  of  local  banks.  As  compared  with  the  good 
done  by  an  independent  country  bank,  with  its  immeasurable  progres- 
sive influences  for  good,  what  can  the  single  excellent  individual  and 
honest  money  lender  do,  who  is  sent  into  the  town  by  the  city  bank? 

A  bank  established  in  a  town  serves  the  whole  body  of  towns  adjoin- 
ing, and  would  reduce  prices  on  goods  to  the  farmers  very  considerably. 
It  is  said  goods  are  uniformly  sold  at  retail,  where  cash  is  paid,  from  5 
to  10  per  cent  less  than  where  payments  are  made  only  once  or  twice  a 
year.  The  country  merchant  is  now  the  farmer's  banker,  at  a  cost  to 
the  farmer  in  increased  prices  on  all  the  farmer  buys  of  from  5  to  10 
per  cent  over  what  the  prices  would  be  were  there  a  bank  in  his  neigh- 
borhood. He  could  borrow  money  of  the  bank  on  his  own  note,  which 
he  could  pay  at  the  dates  at  which  his  hogs,  or  horses,  cattle,  wheat, 
corn,  oats,  rye,  flax,  or  cotton,  etc.,  were  ready  for  market. 

CLEARING  HOUSES. 

The  Hill-Fowler  bill  undertakes  the  impossible  in  laying  obligations 
on  clearing  houses  having  no  legal  existence. 

Under  the  Walker  bill  every  clearing  house  in  the  country  is  made  a 
body  corporate  to  deal  with  under  the  law  and  brought  into  the  system, 
and  every  commercial  bank  as  well. 

The  Hill-Fowler  bill  needlessly  antagonizes,  in  very  many  of  its  pro- 
visions, nearly  every  notion,  opinion,  economic  and  political,  and  the 
experience  of  our  70,000,000  of  people. 

WALKER  RILL   OFFENDS  NO  PREJUDICES. 

The  Walker  bill  takes  cognizance  of  every  notion,  opinion,  preju- 
dice, etc.,  of  gold  men,  silver  men,  greenbackers,  Government  sub- 
treasury  men,  and  Government  currency  2  per  cent  loan  men.  Not 
one  of  them  can  consistently  vote  against  the  Walker  bill.  Every  one 
of  them  claims  to  desire  that  all  paper  money  and  coin  money  shall  be 
kept  at  a  parity,  which  the  Walker  bill  provides  for  doing. 

The  Hill-Fowler  bill,  with  its  restrictive  features,  and  annulling  their 
charters  at  the  end  of  a  year,  could  have  only  one  outcome  to  all  national 
banks,  viz,  to  drive  every  one  of  them  out  of  the  national  system  and 
into  reorganizing  under  State  laws,  or  drive  them  out  of  business. 

The  Walker  bill,  on  the  other  hand,  leaves  banks  far  more  freedom 
than  now  to  safely  conduct  their  business  under  it  and  brings  every 
"commercial  bank"  into  the  national  system  and  makes  the  position 
of  every  one  of  them  absolutely  secure  in  any  event,  excepting  in  making 
unsafe  loans  and  from  dishonesty  among  its  officers. 

SOUTH  AND   WEST  W'ULD  DEVELOP  BANKING  UNDER  WALKER  BILL. 

Bank  funds  are  now  so  abundant  in  the  New  England,  the  Eastern, 
and  Middle  States  that  they  can  not  find  employment  in  strictly  com- 
mercial business.  A  large  proportion  of  them  are  now  invested  in 
United  States  and  other  bonds.  One  hundred  million  dollars  and  more, 
because  of  their  abundance,  are  now  loaned  in  Europe  on  call.  Pass  the 
Walker  bill  and  allow  the  Southern,  Western,  and  Pacific  States  to 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  175 

fully  develop  their  banking  and  currency  interests  under  the  only  law 
yet  proposed  that  makes  it  possible  to  them  to  do  so, and  interest  rates  on 
loans  made,  on  the  same  security,  to  the  same  amount,  and  on  the  same 
time,  would  be  very  nearly  as  low  all  over  the  country  as  in  cities,  and 
lower  than  in  any  European  country,  not  excepting  Great  Britain. 
Europe  could  not  keep  gold  unless  her  interest  rates  were  as  high  or 
higher  than  ours. 

If,  besides,  a  banking  committee  of  the  House  could  be  appointed 
with  suilieient  wit  to  report  and  secure  the  passage  of  the  interna- 
tional American  bank  bill,  within  a  comparatively  brief  time  the 
money  center  will  be  moved  from  London  to  New  York  or  Chicago. 

HILL-FOWLER  BILL  NOT  DRAWN   ON  ECONOMIC  PRINCIPLES. 

Finally,  the  Hill-Fowler  bill,  like  the  existing  national  banking  law, 
is  not  drawn  on  any  recognized  principles  of  economics  and  sound  bank- 
ing principles.  Its  requirements,  prohibitions,  and  penalties  are  not 
justified  by  experience. 

The  Walker  bill  is  drawn  in  accord  with  true  economic  law  and  sound 
banking  principles,  and  every  requirement,  prohibition,  and  penalty  is 
justified  by  the  testing  of  every  line  of  it  by  the  experience  of  the  good 
and  bad  State  banks  for  years  previous  to  18(52,  by  the  experience  of 
our  national  system  for  thirty  years,  and  by  the  experience  of  France, 
Germany,  Great  Britain,  etc. 

If  anyone  will  point  out  an  excellence  in  the  banking  laws  of  any 
country  not  included  in  it,  or  a  provision  in  it  not  consistent  with 
experience  and  the  very  best  results  of  financial  and  banking  expe- 
rience of  the  world,  when  it  is  shown  the  bill  will  then  be  corrected 
accordingly,  or  abandoned.  I  only  remark  that  one  bank,  with  all 
other  1  tranches,  or  all  banks  as  integral  parts  of  oue  whole,  are  only 
admissible. 

If  any  performance  fell  so  far  short  of  the  announcement  of  the  play 
on  the  bill  boards  as  the  various  bills  referred  to  the  Committee  on 
Banking  and  Currency,  or  prepared  by  some  members  of  it,  have  of  the 
commendations  of  them  sent  broadcast  over  the  country  by  the  Mone- 
tary Commission,  the  audience  would  do  as  much  credit  to  their  sense 
of  justice  as  they  would  discredit  to  their  patience,  by  mobbing  the 
performers. 

RECAPITULATION. 

The  Hill-Fowler  bill  does  none  of  the  following  things,  the  doing  of 
which  is  made  certain  by  the  Walker  bill: 

1.  The  Walker  bill  makes  sure  the  maintenance  of  parity  between 
all  forms  of  our  existing  money  by  the  banks. 

2.  Retains  the  actual  use  of  gold  and  silver  money  by  retiring  all 
silver  certificates  and  all  gold  certificates. 

3.  Does  not  impound,  retire,  or  change  the  existing  United  States 
legal-tender  notes. 

4.  It  provides  for  only  one  kind  of  paper  money,  viz,  a  national-bank 
bill  as  securely  guaranteed  by  the  Government  as  the  present  national- 
bank  notes. 

5.  It  relieves  our  hazardous  situation  in  case  of  panic  or  reverses 
in  war. 

6.  It  reduces  interest  rates  on  loans  by  country  banks  from  one-third 
to  one-half. 


176  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

7.  It  absolutely  and  forever  relieves  the  United  States  Treasury  of 
the  current  redemption  of  any  form  of  paper  money  by  putting  it  on 
banks. 

8.  It  does  not  pile  up  vast  sums  of  money  in  the  Treasury  to  create 
discontent  among  the  people. 

9.  It  furnishes  no  needless  opportunity  or  encouragement  to  the 
hoarding  of  gold. 

10.  It  iurnishes  a  currency  the  hoarding  or  destroying  of  which 
makes  lower  the  rate  of  interest  by  bauks  and  helps  the  United  States 
Treasury. 

11.  It  gives  every  dollar  of  currency  as  explicit  and  available  a 
Government  guarantee  as  now. 

12.  It  unites  all  banks  of  the  country  in  an  organization  to  guaran- 
tee the  parity  of  all  United  States  notes,  silver  coin,  gold  coin,  and 
national-bank  notes,  as  solid  and  secure  as  the  Bank  of  France,  and 
more  so  than  the  banks  of  any  other  nation  excepting  France. 

13.  It  builds  up  this  fabric  by  units  as  separate,  distinct,  and  inde- 
pendent as  is  the  citizen  in  a  town  who,  acting  together  with  his  fel- 
lows, makes  a  body  politic. 

14.  It  thus  takes  careful  cognizance  of  every  phase  of  political  and 
economic  thought  among  the  people. 

The  Hill-Fowler  bill  takes  no  cognizance  of  the  political  situation, 
and  needlessly  offends  the  great  mass  of  the  voters. 

Bryan's  vote,  6,500,000;  McKinley,  7,000,000. 
Bryan  2,000,000  crazy  for  silver. 

2,000,000  frenzied  by  the  present  banking  and  currency  situ- 
ation and  care  nothing  for  free  coinage  of  silver. 
2,500,000  care  nothing  as  to  what  principles  the  Democratic 
platform  preaches  or  for  silver.    They  are  for 
the  "machine." 


6,500,000 

1,000,000  Republicans  are  earnestly  for  the  unlimited  coin- 
age of  silver,  but  are  more  for  what  the  Repub- 
lican party  represents  in  other  things  than  for 
silver. 

6,000,000  voters  are  more  or  less  suspicious  or  opposed  to 
national  banks,  and  almost  wholly  on  account 
of  the  use  of  United  States  bonds  by  banks  to 
get  currency  notes  on. 

15.  The  margin  of  3£  per  cent  of  sound-money  voters  is  dangerously 
small.  We  must  win  from  those  among  the  people  who  want  a  better 
currency  system  enough  votes  to  make  sound  money  safe,  and  must  also 
keep  the  1,000,000  Silver  Republican  voters  for  maintaining  parity. 

16.  How  can  we  do  it? 

Not  by  telling  the  people  that  we  have  changed  the  paper  money  they 
will  hereafter  carry  in  their  pockets  into  bills  not  guaranteed  by  the  Gov- 
ernment as  the  Rill-Fowler  bill  does.  Not  by  giving  the  people  anything 
any  less  secure  than  they  now  have.  But  that  in  changing  the  paper 
money  and  leaving  out  the  bonds  we  have  kept  the  Government  guarantee. 

17.  Neither  can  we  tell  the  people  when  we  meet  them  face  to  face  in 
their  primary  meetings  that  we  have  given  them  two  kinds  of  paper 
money — one  they  can  never  lose  a  dollar  on,  however  poor  the  bank 
issuing  it  may  be,  for  the  Government  is  behind  it;  and  another  that 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  177 

they  must  look  to  the  bank  only  to  pay  in  case  of  insolvency.     As  a 
party  measure,  such  a  statement  would  be  worse  tlem  to  <l<>  not/tint/. 

18.  We  had  better  stop  here;  and  now,  and  carefully  examine  our 
position  as  to  all  the  bills  before  us,  Fowler  bill,  Gii»o  bill,  .McClary 
bill,  Hill  Fowler  bill,  commission  hill,  Walker  bill. 

The  lirst  section  of  my  bill  involves  this  question  of  what  currency 
we  shall  provide. 

What  inducements,  what  reason,  can  we  give  for  the  change  from 
what  now  is? 

What  are  the  charges  made  against  national  banks  .' 

National  banks,  $100,000  capital.  (1)  Banks  buy  $100,000  of  bonds, 
on  which  they  get  1  and  5  per  cent  interest.  Then  they  (2)  take  them 
to  the  Government  Treasury  and  get  $90,000  currency  for  the  bonds, 
and  loan  the  currency,  getting  (3)  from  4  to  10  per  ceut  interest  on  this 
currency. 

Interest  on  the  bonds  averages  4A + 4=  8   percent.  ^ 

4i+ 0=104  percent.  >  gotten  by  banks. 
4f+8=12| percent.  ) 

The  usual  reply: 

(1)  Every  dollar  of  currency  is  secured  by  the  pledge  of  a  United 
States  bond  in  the  Treasury  of  the  United  States. 

(2)  You  can  not  have  a  safe  curreucy  unless  its  payment  is  made  sure 
by  the  guarantee  of  the  United  States. 

(3)  No  holder  of  a  currency  note  has  ever  lost  a  dollar  on  a  note  of 
an  insolvent  bank  since  we  had  national  bauk  notes.  Unlike  the  old 
State  banks. 

(4)  We  have  the  best  banking  system  in  the  world,  because  our  cur- 
rency notes  have  absolute  security  in  the  guarantee  of  the  United  States. 

Rejoinder: 

(1)  Secured  currency.  What  good  does  that  do  us?  It  may  be 
secured,  but  we  have  no  currency  in  our  part  of  the  country,  and  can 
not  get  it. 

(2)  We  can  not  borrow  it  at  any  price. 

(3)  We  have  plenty  of  property — hogs,  horses, cattle,  sheep,  hay,  oats, 
corn,  wheat,  but  no  money. 

(4)  We  want,  and  will  have,  more  money. 

(5)  What  good  is  it  to  us  that  currency  is  absolutely  safe  to  the  holder 
if  we  can  not  get  auy  to  "hold?" 

Reply : 

(1)  Money  is  plenty.    There  never  was  so  much  money. 

(2)  The  Treasury  reports  show  double  the  money  now  for  each  man, 
woman,  and  child  that  there  was  before  the  war  or  after  the  war  closed. 

(3)  Anyone  who  has  anything  to  sell  can  get  money  enough. 

(4)  Anyone  can  borrow  money  that  has  anything  to  borrow  it  on. 

Rejoinder: 

(1)  I  know  money  is  not  plenty.  I  do  not  care  what  the  Treasury  or 
any  other  "  reports  show.1" 

(2)  We  are  determined  to  have  more  money. 

(3)  We  never  had  any  more  things  to  sell,  nor  more  of  them,  than 
now. 

(4)  But  we  have  to  sell  them  immediately  when  they  mature. 

(5)  We  can  not  borrow  any  money  to  hold  them  until  we  can  get  fair 
prices. 

b  &  c 12 


178        STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 

(6)  We  sell  them,  and  when  the  speculators  have  skinned  us  of  all 
we  have  raised  at  low  prices  we  hear  that  prices  have  gone  up  5, 10, 15, 
or  20  per  cent. 

(7)  We  will  try  the  unlimited  coinage  of*  silver  if  we  can  not  get  any- 
thing else. 

"Reply : 

(1)  Unlimited  coinage  of  silver  will  do  you  no  good.  How  are  you 
going  to  get  the  silver  after  it  is  coined? 

(2)  The  Government  can  only  get  it  out  by  paying  it  out. 

(3)  You  can  not  get  it  unless  you  work  for  it  or  sell  something  for  it 
which  you  have  worked  to  raise,  etc. 

(4)  A  50-cent  dollar  can  not  help  you. 

(5)  Even  that  will  not  be  given  you,  etc. 

Rejoinder : 

Yes ;  I  know  that;  but  I  can  not  be  any  worse  off.  The  bankers  and 
their  friends  and  neighbors  get  all  the  money  they  want.  I  can  borrow 
no  money  when  I  have  as  much  property  in  hogs  that  will  be  marketed 
in  three  or  four  months.  My  wheat,  com,  oats,  barley,  horses,  beef,  etc., 
are  as  good  as  any  man's  property.  I  can  not  be  any  worse  off,  and  I 
will  try  unlimited  coinage  of  silver  anyway,  and  take  the  chances. 

This  is  not  argument  or  reason,  but  it  is  exactly  the  condition  of  mind 
6,500,000  voters  are  in,  or  worse. 

Reply : 

What  can  be  said  on  the  stump — 

We  are  called  gold  bugs,  gold-standard  men,  etc.,  etc.  We  are  not 
single  gold-standard  men,  if  you  mean  by  that  that  we  have  changed. 
We  are  now  where  we  have  been  since  the  Government  was  born — for 
having  the  best  money  in  the  world ;  and  will  keep  each  form  of  our 
money — paper,  silver,  and  gold— at  a  parity  with  every  other. 

HOW  THE  WALKER  BILL  HELPS  THE  PEOPLE. 

People  ought  to  get  paper  money  for  the  asking,  if  they  will  keep  it 
as  good  money  as  the  world  ever  saw,  and  not  other  ways. 

(1)  Any  of  you  five  men  can  get  together  $25,000,  which  is  as  little 
capital  as  can  be  made  to  pay  expenses  in  a  bank  and  make  it  safe,  and 
can  go  to  the  United  States  Government  and  get  $25,000  of  notes,  pay- 
ing only  the  cost  of  printing.  Then  the  five  men  can  make  the  $25,000 
of  notes  they  get  their  own  notes  by  having  the  president  and  cashier 
sign  them.  Then  these  five  men  can  circulate  them  as  money.  But 
you  say  that  is  the  way  they  used  to  do  before  the  war,  and  we  do  not 
like  that  kind  of  money. 

(2)  Yes;  but  the  Government  did  not  guarantee  that  money,  and  it 
does  this  money.  The  money  I  am  talking  of  is  guaranteed  by  the 
United  States  just  as  surely  as  it  is  now.  It  is  exactly  the  same  money 
as  we  now  have.  It  has  the  Government  guarantee,  as  we  have  always 
told  you  it  must  have,  in  order  to  be  good  money.  The  only  difference 
is  this: 

Now,  the  Government  issues  its  bond,  sells  it  to  the  bank,  and  the  bank 
puts  it  back  in  the  hands  of  the  Government  that  made  the  bond,  takes 
notes  for  it,  goes  home,  and  makes  those  notes  its  own,  exactly  as  under 
our  law,  by  signing  them  by  the  president  and  cashier  of  the  bank,  and 
uses  them  as  money  as  now.    But  now  the  Government  takes  the  capital 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  179 

of  the  banks  so  the  people  can  not  borrow  it,  but  pays  the  bank  l  or  5  per 
cent  interest  on  the  bonds,  and  the  bank  also  gets  Interest  on  the  bank- 
note money  it  got  on  the  bond.  Under  onr  law  the  Governmenl  pays 
the  bank  nothing.    The  Go\  eminent  mates  the  notes  we  have  provided 

you  precisely  the  same  money  as  to  securities  as  the  present  Dotes,  in 
ease  the  bank  tails,  by  writing  in  the  statutes  that  every  one  of  the 
notes  shall  be  immediately  paid  ont  of  the  United  States  Treasury  if 
the  bank  fails;  and  the  Government  shall  then  take  all  the  property  of 
the  bank  to  pay  itself  with  the  property  of  the  bank,  and.  besides  t  iiat, 
it  makes  all  the  banks  pay  a  tax  on  all  these  notes  all  the  time,  and 
enough  to  make  up  any  loss  it  could  possibly  make  in  paying  these 
notes,  and  several  times  as  much  as  any  loss  could  be. 

(3)  What,  then,  have  we  done? 

A.  We  have  given  you  a  paper  money  as  much  guaranteed  and  made 
secure  by  the  Government  in  case  the  bank  fails  as  now — the  same  as 
it  has  always  been. 

1>.  The  people  have  always  complained  that  the  banks  got  interest 
paid  to  them  twice,  once  by  the  Government  on  the  bonds  put  up  and 
then  by  the  borrower.  We  have  stopped  the  Government  interest  to 
banks  on  the  bonds  by  taking  out  of  the  law  the  right  of  only  the 
bondholder,  as  you  have  said.  You  have  always  said  "a  man  must 
become  a  bondholder  to  get  paper  money."  Our  law  allows  any  five 
reputable  citizens  to  get  it  without  having  to  first  buy  bonds  and  then 
put  up  its  $25,000  capital  in  the  bonds  as  a  guaranty  to  keep  their  bank 
notes  as  good  as  our  greenbacks. 

C.  We  have  done  more.  Wre  have  put  upon  the  banks  the  duty  of 
keeping  all  our  money — greenbacks,  silver  dollars,  gold  dollars,  and 
bank  notes — each  and  all  as  good  as  the  best  money  in  the  world  by 
keeping  all  at  a  parity. 

Every  greenbacker  says  that  must  be  done. 

Every  man  favoring  unlimited  coinage  of  silver  says  that  must  be 
done. 
Every  bank  man  says  that  must  be  done. 
Our  law  does  exactly  what  all  classes  of  people  say  they  want  done. 

D.  It  cost  the  United  States  Treasury  from  $12,000,000  to  $20,000,000 
a  year  to  keep  our  money  at  par,  which  is  taken  out  of  you  by  taxation, 
in  the  last  twenty  years.  We  have  stopped  all  that,  besides  the  hun- 
dreds of  millions  in  indirect  taxation.  It  has  been  cheap  at  its  cost, 
rather  than  not  have  it  done  by  anyone;  but  now  the  banks  must  do  it 
in  future,  as  banks  do  in  all  other  countries,  and  at  no  cost  to  you,  or 
cost  to  them,  as  to  that  matter. 

E.  We  have  also  required  in  the  bill  that  when  a  bank  note  gets  into 
New  York,  Chicago,  or  any  other  city  it  shall  be  sent  home,  to  be  loaned 
there.  They  can  not  pile  notes  up  in  New  York  by  the  hundred  million 
under  our  bill,  as  they  do  now. 

F.  As  any  five  of  you  can  get  together  and  form  a  bank,  with  the 
money  to  put  up  in  order  to  make  the  bank  notes  you  get  secure  and 
not  be  obliged  to  use  tip  your  capital  in  first  buying  bonds,  money 
can  not  be  "cornered"  or  excessive  interest  charges  be  made  on  it  by 
banks. 

G.  Under  our  law  you  can  borrow  such  money  nearly  one-third  (cer- 
tainly one-fourth)  less  than  the  interest  now  is  on  our  present  bond 
money,  for  the  reason  that  bond  money  uses  up  the  capital  you  put  up 
in  buying  the  bonds. 

H.  Under  our  bill  the  people  have  the  $25,000  capital  to  borrow,  and 


180  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

$25,000  bills  also,  as  they  do  in  Canada,  Scotland,  France,  Germany, 
and  every  other  country,  and  can  therefore  loan  money  as  cheap  here 
as  in  Europe. 

Remember,  in  all  this  talk  and  in  no  talk  ever  made  was  the  mind  of 
a  single  one  of  the  average  voters,  making  three  fourths  of  our  voters, 
ever  cleared  up  on  the  proposition  that  the  banker  did  not  get  4  to  5 
per  cent  on  his  bonds,  and  4,  6,  8,  or  10  per  cent  interest  in  addition  on 
the  currency  paid  out  by  the  banks. 

That  belief  remains;  and  that  belief  and  the  further  fact  that  there 
is  now  no  bank  in  many  considerable  centers  of  business  throughout 
many  sections  of  the  country  to  make  the  people  loans  at  reasonable 
rates  of  interest,  and,  still  more,  educating  a  body  of  citizens  connected 
with  banks  to  post  up  the  citizens  on  the  real  facts,  and  thus  steady 
public  opinion  with  their  knowledge  and  experience,  has  done  more  to 
prepare  the  minds  of  the  people  to  receive  the  seed  of  the  error  of 
unlimited  coinage  of  silver  by  our  country,  without  the  help  of  other 
countries,  than  its  adherents  have  done  to  propagate  that  error. 

The  only  conceivable  cure  of  it  is  in  setting  a  back  fire  in  increased 
free  but  sound  bank  currency. 

The  people  have  a  moral  right  to  this  free  and  "  true  bank  currency," 
such  as  the  people  iu  every  other  country  have,  such  as  is  provided  in 
the  Walker  bill,  H.  E.  10333. 

Not  one  of  these  statements  can  be  truthfully  made  of  the  Hill-Fowler 
bill. 

BANK   OF  ENGLAND. 

In  addition  to  what  has  been  already  said  in  objection  to  grafting  on 
to  our  bad  banking  system  the  one  bad  feature  of  the  otherwise  most 
excellent  Bank  of  England  system,  I  wish  to  say  that  the  belief  of 
some  sincere  friends  of  reform — that  we  can  correct  admitted  evils  by 
a  system  of  Treasury  bookkeeping,  as  in  the  Bank  of  England,  while 
$1,000,000,000  to  $1,200,000,000  still  remain  as  demands  for  gold  on  the 
United  States  Treasury — is  the  most  fatuous  of  all. 

The  Bank  of  England  system  of  issuing  currency  could  by  no  stretch 
of  the  imagination  be  thought  by  sound  financiers  to  have  any  chance 
of  adoption  in  England  to-day  were  it  an  original  proposition. 

If  the  Bank  of  England  system  was  not  urged  on  us  ex  cathedra, 
no  one  would  think  of  adopting  it. 

Nearly  the  whole  body  of  European  financiers,  and  English  as  well, 
believe  the  restriction  of  its  note  issue  to  be  the  one  defect  in  the  Bank 
of  England  system,  with  reference  to  the  pretended  greater  security 
given  to  the  business  and  commerce  of  Great  Britain  in  preventing  or 
allaying  panics  by  its  method  of  issuing  currency,  over  and  above  the 
method  pursued  by  the  Bank  of  France,  the  Bank  of  Germany,  or  in 
New  England  under  the  Suffolk  system,  from  1840  to  1864,  which  lat- 
ter I  believe  to  have  excelled  all  others,  excepting  the  Scotch.  No  one 
believes  in  it,  and  yet  it  is  proposed  to  foist  the  semblance  of  this  sys- 
tem, but  in  a  far  more  objectionable  form  on  our  present  chaotic  system, 
or  rather  want  of  system.  The  claim  that  the  internal  arrangements 
of  the  Bank  of  England  required  by  law,  as  to  keeping  its  accounts 
and  its  gold  (for  that  is  the  sum  and  substance  of  the  whole  contro- 
versy), gives  any  greater  security  to  the  creditors  of  the  bank  and  to 
the  business  interests  of  Great  Britain,  or  makes  its  currency  any  more 
secure  than  are  the  currency  notes  of  the  institutions  named,  is  wholly 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  181 

unfounded.  The  highest,  and,  in  fact,  the  only  substantial  approval 
in  finance  is  imitation,  and  the  Bank  of  England  system  has  been 
unanimously  condemned  in  not  being  adopted  by  a  single  bank  in  the 
world  during  the  titty-three  years  of  its  existence.  The  Bank  of  Eng- 
land is,  first  of  all,  the  commercial,  and  still  more  the  gold,  clearing 
house  of  the  world,  rather  than  a  hank  proper.  That  it  is  managed 
with  consummate  ability,  by  "giants  in  the  land,"  is  not  disputed, 
but  its  success  is  believed  by  nearly  the  whole  body  of  the  practical 
financiers  in  Europe  to  be  not  because  of,  but  in  spite  of,  its  system  of 
issuing  currency.     Its  position  is  nniipie. 

It  is  proposed  in  the  Hill-Fowler  bill  to  go  further  even  than  the 
Bank  of  England  in  making  our  legal-tender  notes  purely  gold  certifi- 
cates. 

The  Bank  of  England  notes  are  not  gold  certificates  in  form  or  sub- 
stance, as  distinguished  from  the  notes  of  the  Bank  of  Germany  or  the 
Bank  of  France. 

The  issue  department  of  the  Bank  of  England  held  gold  to  the  amount 
of  only  GG  per  cent  of  the  currency  it  had  outstanding  on  December  !>, 
L896,  as  shown  by  the  Bankers'  Magazine,  London,  England.  It  is 
therein  reported  that  in  LS47  the  bank  held  gold  to  48.81  percent  of 
its  notes  in  circulation,  48.75  per  cent  in  1850.  In  1857  it  held  gold  to 
41.23  per  cent.  In  1860  it  held  G5.21  per  cent,  on  October  3, 1889,  73.37 
per  cent,  etc.,  etc.  To  its  total  gold  liabilities  a  comparatively  small 
per  cent,  while  not  only  English  merchants,  but  the  commerce  of  the 
world,  looks  to  the  $150,000,000,  more  or  less,  gold  in  the  Bank  of  Eng- 
land for  gold  exchange. 

The  Bank  of  England  law  gives  no  preference  to  its  obligation  in  the 
form  of  a  Bank  of  England  note  over  any  other  form  of  its  total  obli- 
gations of  $450,000,000  in  the  requirement  that  it  shall  pay  gold  on 
every  demand. 

The  provision  of  law  requiring  the  bank  to  maintain  two  departments, 
one  of  issue  and  another  of  discount,  is  purely  a  matter  of  book- 
keeping, in  that  the  same  men  are  one  and  the  same  corporate  person, 
managing  its  issue  department  and  also  its  discount  department,  and 
invariably  with  the  two  departments  as  one  corporate  person  does 
every  customer  deal.  That  is  to  say,  the  law  recognizes  only  one  cor- 
porate person  in  the  Bank  of  England.  This  is  incontestably  true. 
The  law  simply  defines  how  this  person  shall  act.  How,  then,  can  it 
be  said  that  each  department  has  an  autonomy  of  its  own,  or  increases 
its  ability  to  maintain  gold  payments,  or  that  its  security  is  increased 
or  diminished  by  legal  restrictions  on  its  freedom  of  action  in  an  emer- 
gency1? In  fact,  in  every  crucial  emergency  this  restriction  has  been 
suspended. 

It  is  impossible  by  a  law,  in  provisions  applying  wholly  to  the  man- 
ner in  which  a  corporate  person  shall  manage  its  internal  affairs,  and 
making  parties  of  the  second  part  in  no  way  responsible  for  its  doings, 
to  change  or  modify  or  give  preference  in  securing  gold  to  one  obliga- 
tion over  any  other  obligation  assumed  by  such  corporation,  when  it  is 
prescribed  in  the  law  that  every  obligation  (of  the  Bank  of  England) 
is  identical  in  this,  viz,  that  they  are  each  and  all  payable  in  gold  ou 
demand. 

The  testimony  before  the  Committee  on  Banking  and  Currency  was 
that  the  Government  is  responsible  for  maintaining  parity  in  all  forma 
of  our  money,  keeping  each  at  a  parity  with  the  other,  directly  or  indi- 


182  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

rectly,  each  dollar  of  it  on  a  par  with  the  other  in  demanding  gold. 
The  least  reflection  will  convince  anyone  that,  in  the  nature  of  the  case, 
this  must  be  true. 

Finally,  the  Bank  of  England  was  prohibited  from  giving  any  pref- 
erence to  one  of  its  creditors  who  held  one  of  its  obligations  in  the  form 
of  a  Bank  of  England  note  over  a  creditor  who  had  one  of  its  checks, 
drafts,  bills  of  exchange,  or  only  a  deposit  in  the  bank  subject  to  check. 
That  we  may  understand  the  situation,  I  give  its  exhibit  for  December 
9,  1896,  in  dollars,  and  in  the  form  used  by  national  banks : 

ASSETS. 

Government  debt $53, 604, 984 

Government  securities *>6,  928,  823 

Other  securities 157, 353,  785 

Loans  aud  discounts H7j 805,  579 

Gold  coin  and  bullion Id,  945?  829 

Silver  and  gold  coin H>  729, 881 

Total 569,368,881 

LIABILITIES. 

Proprietors'  capital 70,  822, 174 

Surplus  and  undivided  profit 15,  350,  863 

Public  deposits 32, 113,  216 

Other  deposits 206,  686,  6l£> 

Seven  days'  and  other  bills 692, 984 

Currency  notes 243,  703,  029 

Total 569,368,881 

Liabilities  to  the  Government 118, 2S6, 253 

Liabilities  to  individuals 451, 082, 628 

As  not  a  dollar  of  this  $570,000,000  has  the  slightest  preference  over 
any  other  dollar,  from  the  Bank  of  England  notes  to  deposits  of  indi- 
viduals, in  being  payable  in  gold  or  having  the  right  to  demand  gold, 
how  can  anyone  conceive  that  a  rigid  bank  regulation  or  inexorable 
statute  law  in  restriction  of  the  freedom  of  the  bank  as  to  the  mechan- 
ism of  keeping  its  gold  or  issuing  its  currency  or  paying  out  its  cur- 
rency as  uuforseen  emergencies  arise  can  be  any  other  than  a  promoter 
and  intensifier  of  panics  rather  than  a  source  of  stability  and  confidence 
in  the  ever-expanding  and  contracting  demand  for  currency  and  the 
complex  and  ever- varying  and  unknowable  banking  gold  conditions? 

Shall  this  country,  in  the  Hill-Fowler  bill  or  at  the  request  of  any  man 
or  body  of  men,  because  of  their  eminent  respectability  and  ardent 
patriotism,  make  our  treasury  condition  ten-fold  worse  than  it  now  is  by 
adopting  the  currency  system  of  the  Bank  of  England,  when,  as  I  have 
said,  it  has  received  the  most  severe  and  unanimous  condemnation  in 
the  practice  of  all  the  other  banks  of  the  whole  world  for  the  fifty-three 
years  of  its  existence?  The  greatest,  in  fact  the  only,  competent  or 
tangible  evidence  of  approval  of  any  financial  device  is  its  adoption  by 
those  who  approve  it.  Every  bank  in  every  country  has  in  practice 
condemned  the  Bank  of  England  machinery  for  keeping  and  paying 
out  its  gold  and  issuing  its  currency  by  refusing  to  adopt  its  system. 


STRENGTHENING    THE    PUBLIC    CREDIT,   ETC.  \s;\ 

Furthermore,  the  whole  body  of  the  world's  practical  financiers,  with 

few  exceptions,  condemn  it  in  words,  as  they  all  do  in  practice,  it  is 
not  abandoned  by  the  Bank  of  England  from  the  fact  that  the  warp 
and  woof,  the  success  of  moderate  banking,  is  based  on  "confidence,^ 
and  when  eonlidence  exists,  rightly  or  wrongly,  bankers  are  not  war- 
ranted in  disturbing  the  public  mind  by  a  change,  however  desirable  in 
itself  the  change  may  be.  The  only  justification  for  action  here,  bad  as 
is  our  system,  is  that  the  people  having  come  to  ;i  knowledge  of  the 
perils  of  our  financial  position,  eonlidence  is  destroyed  ami  immediate 
reform  is  demanded  on  every  hand.  I  could  till  a  hundred  pages  with 
adverse  criticism  of  the  Bank  of  England  system  from  the  Leading 
financial  writers  of  the  world,  but  as  I  am  appealing  to  the  peat  jury 
that  must  finally  decide  this  question,  viz,  the  plain  people,  I  use  my 
limited  space  in  quoting  the  final  verdict  of  those  most  competent  to 
form  right  opinions,  from  authorities  the  people  can  consult,  which  are 
crystallized  in  encyclopedias. 

The  Encyclopedia  Britannica  is  content  to  give  definitions  and  state 
facts  as  to  subjects  in  other  cases,  but  in  that  of  the  Bank  of  England 
it  confesses  judgment  through  page  after  page  of  special  pleadings 
that  command  the  respect  of  but  few  financiers,  and  disputes  its  own 
facts. 

It  confesses  that : 

"It  must  be  admitted  that  the  variations  in  the  rate  of  discount 
charged  by  the  bank  have  been  much  more  numerous  and  violent  since 
1844  than  they  were  before,  and  on  these  occasions  it  has  been  judged 
necessary  to  authorize  the  suspension  of  the  act  so  far  as  to  allow  the 
bank  directors  the  power  to  strengthen  the  banking  department  by 
recourse  to  the  reserves  in  the  issue  department.  In  each  case  the 
suspension  of  the  act  arrested  and  allayed  the  panic  prevailing  up  to 
the  moment  of  suspension,  and  in  1800  it  was  not,  in  fact,  found  neces- 
sary to  exercise  the  power  to  borrow  from  the  issue  department,  which 
had  been  conceded  to  the  directors." 

What  is  meant  by  the  "suspension  of  the  act"  is  the  deliberate  vio- 
lation of  the  plain  letter  and  spirit  of  the  law  of  the  land  "by  the 
action  of  the  executive  government  (of  the  bank)  acting  on  the  faith  of 
a  subsequent  indemnity  by  Parliament." 

And  this  is  the  system  of  banking  laws  recommended  to  this  country, 
badly  as  it  serves  the  greatest  bank  in  the  world.  On  our  Public 
Treasury,  without  a  shred  of  banking  business  or  banking  powers  to 
mitigate  and  hide  its  defects,  this  travesty  of  the  true  banking  and 
true  and  safe  currency  principle  and  safe  bank  and  currency  practice  is 
to  be  saddled  with  this  excrescence. 

Again  it  says: 

"Again,  it  may  be  freely  admitted  that  it  is  not  improbable  that 
changes  (crises)  have  from  time  to  time  happened  that  might  not  have 
occurred  supposing  the  separation  of  the  hanking  and  issue  depart- 
ments had  not  been  established.  *  *  *  The  repeated  suspensions 
of  the  act  of  1844  in  time  of  trial  do,  prima  facie,  present  a  much 
stronger  argument  for  the  repeal  of  the  statute.  Legislation  which 
breaks  down  upon  critical  (crucial)  occasions  discredits  the  legislature 
that  decreed  it.  Sir  Kobert  Peel,  in  common  with  the  earlier  advocates 
of  the  policy  of  the  act  (separate  departments),  believed  that  it  would 
prevent  the  recurrence  of  commercial  crises,  etc." 

The  statement  by  it  of  the  fundamental  principles  governing  the 
issue  of  currency  laid  down  by  the  article  and  accepted  by  all  writers 


184        STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 

on  finance  confounds  it  in  every  word  of  its  defense  of  the  abnormal 
provisions  of  the  Bank  of  England  act  of  1844  as  to  its  issuing  cur- 
rency, viz : 

"  ]So  inference  can  be  safely  drawn  from  the  number  (amount)  of 
notes  or  coins,  or  both,  afloat  in  the  country  as  to  whether  its  currency 
be  or  be  not  in  excess.  That  is  to  be  learned  by  the  state  of  the  exchange, 
as  by  the  intiux  and  efflux  of  bullion.  If  the  imports  of  bullion  exceed 
the  exports,  it  seems  that  the  currency  is  in  some  degree  deficient, 
while  if  the  exports  exceed  the  imports  it  shows  that  the  currency  is  in 
excess,  and  that  no  additions  can  be  made  to  it  without  further  depress- 
ing the  exchange  and  increasing  the  drain  of  bullion.  When  the 
imports  and  exports  of  bullion  are  about  equal,  then,  of  course,  the  cur- 
rency is  at  about  its  par  level.  These  are  the  only  criteria  by  which 
anything  can  ever  be  correctly  inferred  in  regard  to  the  deficiency  or 
excess  of  currency.  Its  absolute  amount  affords  hardly  even  a  basis 
for  conjecture.  Excepting  in  periods  of  internal  commotion,  or  when  we 
are  disturbed  by  alarms  of  invasion,  the  state  of  the  exchange  is  the 
only,  as  it  is  the  infallible,  test  <  of  the  sufficiency  or  insufficiency  of  the 
currency.' " 

If  there  is  any  one  thing  more  than  another  that  will  establish  in 
the  mind  of  the  banker  a  fear  that  begets  a  crisis  and  panic  or  that  will 
intensify  them,  it  is  that  he  can  not  change  the  form  of  his  obligations 
and  that  his  fellow-bankers  will  not  come  to  his  assistance  in  case  of 
unusual  demands  being  made  upon  him  in  "rediscounting  [his]  bills 
that  had  been  already  discounted  by  him."  See  how  the  Bank  of 
England  is  made  to  appear,  whatever  the  facts  may  be,  to  play  the 
Ishmaelite  and  intensify,  if  it  is  not  a  potent  agent,  in  inaugurating 
crises,  in  a  further  significant  quotation,  viz: 

"  Strict  limitation  in  the  number  and  class  of  customers  with  whom 
the  bank  would  do  business  and  a  refusal  to  rediscount  bills  that  had 
already  been  discounted  by  money  lenders,  make  it  possible  to  keep 
the  bank  rate  below  the  rates  of  the  open  market  without  exposing  the 
resources  of  the  bank  to  an  exhaustive  demand.'7  [And  a  government 
treasury  has  none  of  these  devices  or  resources  to  assist  it.] 

Financiers  farther  declare  that  the  Sir  Robert  Peel  scheme  for  mak- 
ing hard  and  fast  lines  for  banks  in  their  issue  of  currency  was  adopted 
because  of  his  utter  failure  to  appreciate  the  fact  that  the  only  legiti- 
mate and  certain  repressive  device  was  to  compel  banks  to  certainly 
and  instantly  redeem  their  currency  in  specie  in  some  commercial  cen- 
ter, as  well  as  at  their  own  counters.  Where  proper  redemption  is 
required,  overissue  of  currency  has  never,  anywhere,  in  the  history  of 
banking,  had  any  perceptible  influence  in  inciting  or  intensifying  a 
financial  crisis.  Note  the  history  of  the  Suffolk  system,  as  also  that  of 
Virginia  and  Louisiana  from  1840  to  1864.  A  very  wide  latitude  in 
issuing  currency  was  allowed  banks,  even  up  to  their  actual  paid-up 
capital,  and  in  some  States  to  double  their  capital. 

It  is  not  the  holders  of  currency  that  begin  an  unreasoning  demand 
for  specie  from  banks  or  from  the  United  States  Treasury.  There  is 
not  an  instance  of  panic  or  even  monetary  stringency  being  inaugurated 
by  holders  of  currency,  or  a  general  demand  for  specie  by  holders  of 
currency,  until  long  after  depositors  were  in  panic  and  had  done  the 
mischief  which  reacted  on  the  Treasury.  It  can  not  be  shown  that  any 
normal  bank  has  ever  failed  from  the  excessive  issue  of  currency.  The 
insolvency  of  banks  is  caused  by  the  excessive  or  unwise  extension  of 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  185 

loans,  of  which  the  issue  of  currency  may  boar  an  insignificant  part, 
and  our  National  Treasury  to-day  is  the  guarantor  of  every  bank  in 
the  country,  national  or  State,  in  its  maintaining  the  gold  standard. 
No  contradiction  of  this  statement  is  found  in  the  fact  that  dishonest 
persons  sometimes  established  or  got  possession  of  a  State  bank,  stole 
its  funds,  or  debauched  its  currency,  as  such  persons  have  wrecked 
national  banks. 

On  the  other  hand,  the  free  issue  of  currency,  and  in  amounts  that 
would  not  have  been  justified  in  normal  conditions,  has  prevented  or 
allayed  many  a  threatened  or  incipient  panic,  especially  by  the  Hank  of 
England,  and  in  violation  of  law.  Had  our  banks  the  right,  and  had 
they  freely  exercised  it,  in  1803,  to  issue  currency  up  to  their  paid-up 
capital,  bad  as  were  other  financial  conditions,  it  would  have  prevented 
or  safely  and  immediately  relieved  that  panic.  It  was  a  currency  fam- 
ine caused  by  hoarding  currency  quite  as  much  as  of  gold  hoarding. 

Banking  is  a  contest  from  start  to  finish,  in  a  pressure  for  credits  by 
the  borrower,  supported  by  a  desire  for  profits  on  the  loans  by  the 
banker,  on  the  one  side,  and  a  demand,  on  the  other  side,  of  payment 
and  larger  security  by  the  banker.  It  finds  its  duplicate  in  the  bulls 
and  bears  of  the  stock  exchange.  Bankers  must  have  their  every 
available  asset  at  command  to  meet  any  and  every  demand,  and  to  use 
at  their  absolute  discretion  at  all  times,  as  well  as  in  crises,  in  order  to 
prevent  or  to  curb  crises. 

The  Bank  of  England  act  of  1844  was  passed  to  take  away  this  al><o- 
lutely  necessary  discretionary  power.  I  quote  from  the  American 
Encyclopedia: 

"An  examination  of  the  operations  of  the  bank  (of  England)  demon- 
strates the  fact  that  Sir  Robert  Peel  entirely  misapprehended  the 
causes  of  the  fluctuations  complained  of,  and  that  he  applied  the 
restrictions  to  that  particular  branch  which  varied  but  little  (amount  of 
currency  issued).  *  *  *  The  real  cause  of  trouble  was  to  be  found 
in  the  loans  (not  in  its  currency).  *  *  *  That  this  act -(taking  from 
the  management  their  discretion  in  issuing  currency)  has  had  no  effect 
in  mitigating  this  crying  evil  will  be  clearly  seen  in  the  fact  that  these 
fluctuations  have  never  been  more  violent  than  since  its  passage. 
*  *  *  In  its  efforts  (on  May  11, 1 800)  to  save  itself  and  comply  wit  li 
the  absurd  provisions  of  the  bank  act,  it  (the  Bank  of  England)  spread 
ruin  and  desolation  around  it,  and  years  were  necessary  to  enable  the 
country  (Great  Britain)  to  recover  from  the  effects  of  the  panic  thus 
(itself)  created." 

Those  who  think  the  currency  restrictions  upon  the  Bank  of  England 
meet  the  approval  of  the  whole  body  of  England's  most  experienced 
financiers  are  greatly  mistaken.  Scarcely  one  of  them  would  not  have 
a  sense  of  great  relief  should  he  wake  up  any  fine  morning  and  find 
them  swept  away. 

I  am  in  no  seuse  deprecating  the  beauty,  strength,  or  wisdom  of  the 
"Old  Lady  of  Threadneedle  Street."  1  am  only  protesting  that  it  docs 
not  lie  in  what  all  her  true  friends  recognize  as  an  ugly  wart  upon  her 
nose,  as  Samson's  did  in  his  hair.  The  J I  ill  Fowler  bill  would  transfer 
that  wart  to  the  nose  of  Uncle  Sam  and  develop  it  into  a  malignant 
cancer,  poisoning  his  life  blood. 

Under  the  Gladstone  administration,  "Mr.  Low,  as  chancellor  of  the 
exchequer,  introduced  into  the  House  of  Commons  in  1S7.">  a  bill  pro- 
viding    *     *     *     that  the  act  providing  two  departments  might  be 


186  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

suspended  by  order  of  the  Government  upon  certain  conditions  *  *  * 
when  the  governor  and  deputy  governor  of  the  bank  certified  that  panic 
had  caused  a  portion  of  the  bank  notes  nominally  in  circulation  to  be 
locked  up  and  withdrawn  from  (actual)  circulation.  The  authority  of 
Mr.  Gladstone's  administration  had  declined  when  this  bill  was  intro- 
duced *  *  *  and,  assailed  from  many  quarters,  was  withdrawn 
without  the  opinion  of  Parliament  being  taken  on  its  merits.  It  was 
contended  that  Mr.  Low's  attempt  *  *  *  to  define  beforehand  the 
conditions  of  a  panic  was  a  logical  contradiction.  A  panic  has  no  laws; 
it  has  no  fixed  shape.  It  is  precipitated  we  know  not  how,  and  we  are 
in  the  midst  of  it  before  we  are  aware." 

This  amendment  proposed  by  Mr.  Low  proclaims  the  fact  "  that  in  a 
stringency  the  people  lock  up  the  currency  of  the  Bank  of  England, 
and  that  the  law  locks  up  its  gold,  and  in  its  helplessness  a  crisis  is 
thus  actually  precipitated  and  continued  by  the  very  provision  of  law 
avowedly  enacted  with  the  sole  purpose  of  preventing  or  allaying 
crises  such  as  are  now  created  by  it." 

I  repeat,  the  days  of  a  run  on  a  bank  for  specie,  by  presenting  its 
currency  for  redemption,  even  in  crises,  are  past,  never  to  return,  even 
under  as  liberal  an  issue  of  currency  as  was  allowed  by  the  old  New 
England  Suffolk  system  and  that  of  Virginia  and  Louisiana  (look  at 
our  experience  in  the  currency  famine  and.  gold  craze  of  1893),  always 
provided  that  every  bank  is  compelled  to  redeem  its  currency  in  some 
"  reserve  city,"  as  well  as  at  its  own  counter,  and  also  that  the  Govern- 
ment requires  a  very  small  safety- fund  tax,  to  recoup  itself  for  any  loss 
from  guaranteeing  every  dollar  of  currency  issued  by  any  bank,  and 
keeps  the  same  supervision  and  control  as  now  of  all  banks  issuing 
currency. 

Of  course,  I  shall  be  told  of  the  suspension  of  specie  payments  by 
New  England  banks  in  1857;  but  the  fact  is  that  they  only  nominally 
suspended  specie  payments  at  that  time.  Specie  did  not  go  to  a  pre- 
mium, and  all  that  was  legitimately  demanded  of  them  by  their  cus- 
tomers in  the  way  of  their  legitimate  business  was  paid  to  them  "  on 
demand,"  and  the  banks  soon  recalled  their  nominal  suspension.  They 
continued  to  supply  their  customers  with  specie  through  that  crisis, 
precisely  as  France  and  Germany  now  furnish  gold  to  their  customers. 
They  kept  their  currency  at  par  with  specie  precisely  as  the  Bank  of 
France  and  the  Bank  of  Germany  now  sustain  the  silver  and  currency 
of  those  countries  at  par  with  gold.  The  State  banks  of  New  England, 
Virginia,  Louisiana,  etc.,  made  a  better  showing  from  1840  through 
1857  and  up  to  1SG1  than  the  Bank  of  England  did  in  the  same  period, 
during  which  period  the  restriction  on  issuing  currency  by  the  Bank  of 
England  was  suspended  several  times. 

Political  and  party  rivalry,  and  that  only,  prevented  the  passage  of 
the  Low  amendment  by  the  British  Parliament,  and  the  safe  removal 
of  the  hideous  wart  from  the  nose  of  the  comely  Old  Lady  of  Thread- 
needle  street,  that  looks  so  lovely  to  some,  and  that  without  leaving  a 
scar. 

Again,  normally  low  rates  of  interest  can  not  prevail  where  the  true 
bank-note  currency  is  not  issued.  This  country  has  not  seen  a  nor- 
mally issued  bank  note  since  the  State  bank  notes  were  taxed  out  of 
existence.  It  can  be  proven  that  the  purchasing  value  of  the  wages 
or  income  of  every  man  in  this  country  is  reduced  by  nearly  one  per 
centum  per  annum  by  our  faulty  banking,  currency,  and  Treasury 
system. 


STRENGTHENING  THE  PUBLIC  CREDIT,  ETC.        187 

1  will  quote  only  one  more  opinion  on  the  issue  of  currency  system 
of  the  Bank  of  England,  but  it  is  the  final  jndgmenl  of  oneof  tin-  most 
careful  and  experienced  investigators  and  financial  experts  and  writers 
in  Europe.  He  expresses  practically  their  unanimous  opinion.  Pierre 
des  Essarts,  chief  of  the  bureau  of  economics  and  statistics  of  the 
Bank  of  France,  author  of  the  History  of  Banking  in  All  tlie  Lead- 
ing Nations,  etc.,  in  an  article  published  in  the  Journal  of  Commerce 
and  Commercial  Bulletin  of  New  York,  March  10,  1897  (which  no  one 
can  afford  not  to  read),  says: 

"  The  true  bank  note  is  unknown  in  the  United  States.  The  bank 
note  should  be  simply  a  means  of  transforming  a  debt  into  cash.  As 
between  individuals  the  note  is  cash;  but  as  between  the  issuing  bank 
and  the  holder  it  is  a  credit  instrument,  because  the  note  holder  has 
loaned  to  the  bank  the  coin  he  has  a  right  to  demand.  *  *  *  When 
a  bank  of  issue  is  properly  managed,  the  circulation  takes  care  of 
itself.  *  *  *  These  notes  are  sufficiently  guaranteed  if  the  property 
and  securities  against  which  they  are  issued  (the  assets  of  the  bank) 
are  valid  and  of  sufficient  value.  *  *  *  England  has  adopted  an 
automatic  device  for  issuing  currency  notes  which  works  well  in  ordi- 
nary times,  but  the  insufficiency  of  which  has  often  been  demonstrated 
in  critical  times.  We  may  note  in  addition  that  the  bank's  regulations 
for  issuing  currency  notes,  which  are  practically  useless  in  normal  situa- 
tions, become  futile  or  even  dangerous  when  the  bank  is  called  upon  for 
unusual  exertions." 

No  man  can  suggest  any  substantial  advantage  in  the  division  of  the 
issue  department  from  the  discount  department  of  the  Bank  of  England 
over  and  above  the  law  and  practice  of  the  Bank  of  Germany  or 
the  Bank  of  France  or  the  New  England  Suffolk  system  as  it  existed 
before  1864,  while  its  disadvantages  are  clearly  stated  by  authorities 
beyond  question.  In  fact,  as  I  have  said,  in  the  Bank  of  England  and 
nowhere  else,  excepting  partially  under  our  national  bank  act,  is  any 
approach  to  the  English  system  in  operation.  It  is  patent  to  all  that 
very  nearly  the  universal  opinion  of  European  financiers  is  that  the 
success  of  the  Bank  of  England  is  in  spite  of — not  because  of — its  thor- 
oughly abnormal  internal  machinery  for  issuing  currency  and  handling 
gold. 

My  excuse  for  this  long  paper  is  the  strong  effort  that  is  being 
made  not  only  to  engraft  upon  our  national  banking  system  the  cur- 
rency system  of  the  Bank  of  England,  but  to  divert  the  United  States 
Treasury,  as  Washington,  Hamilton,  and  Gallatin  made  it,  still  further 
from  its  legitimate  functions,  and  make  it  a  huge  bank,  modelled  upon 
what  European  financiers  believe  to  be  one  of  the  absurdities  of  the 
English  bank  act  of  1844. 

Furthermore,  the  Bank  of  England  is  confessedly  a  monopoly,  and  its 
monopoly  of  currency  the  most  excessive  of  its  oppressive  features. 
Our  people  demand  all  the  freedom,  the  convenience,  and  the  economy 
of  the  true  bank-note  currency  of  the  old  State  banks,  plus  the  security 
of  national  supervision  and  control  of  our  national  law,  and  also  pins 
a  small  tax  on  currency  to  recoup  the  United  States  Treasury  for  its 
guarantee  of  every  dollar  of  currency  issued  by  the  Government  to  the 
banks  and  put  in  circulation  by  them. 

They  have  repeatedly  refused  to  give  up  the  United  States  legal- 
tender  notes.  They  probably  would  consent  thai  they  be  reduced  to 
$200,000,000  by  paying  1146,000,000  of  them  with  the  gold  now  in  the 
Treasury.    They  demand  that  the  old  Suffolk  system  shall  be  national- 


188 


STRENGTHENING   THE    PUBLIC    CREDIT,  ETC. 


ized,  that  the  only  power  that  can  keep  the  $200,000,000  legal  tender 
notes  and  all  other  currency  and  coin  put  in  circulation  at  par  with 
gold,  absolutely  free  of  expense,  viz,  the  bank,  shall  do  so  by  assuming 
the  current  redemption  of  the  greenbacks  pro  rata  to  their  capital. 

Xo  impartial  investigator  who  will  carefully  examine  the  immense 
body  of  facts  furnished  by  the  Comptroller  of  the  Currency,  and  those 
furnished  by  the  chairman  and  published  in  the  reports  at  the  hear- 
ings before  the  committee,  can  come  to  any  other  conclusion  than  that 
no  substantial  relief  can  come  to  the  United  States  Treasury  by  the 
enactment  of  any  bill  that  is  not  drawn  on  the  lines  of  the  Walker  bill 
(H.  E.  10333). 

Eespectfully  submitted. 

J.  H.  Walker,  Chairman. 


APPENDIX. 


Not  a  single  person  has  appeared  before  our  committee  who  did  not 
condemn  the  principle  on  which  the  Hill-Fowler  bill  (II.  R.  101^89)  is 
drawn,  and  who  did  not  approve  the  principle  upon  which  the  Walker 
bill  (H.  R.  10333)  is  drawn.  This  is  so  patent,  when  dissevered  from 
commendation  or  condemnation  of  any  particular  bill,  and  therefore 
given  without  prejudice,  that  I  append  the  following  extracts  from  the 
testimony  given  before  our  committee  and  published  in  the  u  Hearings :" 

NO   GOLD  PAID  INTO   THE   TREASURY. 

The  Chairman.  What  percentage  of  the  present  income  of  the 
Treasury  is  paid  in  gold  ? 

Secretary  Gage.  Perhaps  one-half  of  one  per  cent;  something  like 
that.    It  is  so  small  that  I  have  not  looked  into  the  matter. 

The  Chairman.  It  cuts  no  figure? 

Secretary  Gage.  No  ;  it  cuts  no  figure  whatever. 

changes  in  the  law  should  be  few  as  possible. 

Mr.  Walker.  Should  not  the  changes  proposed,  while  being  thor- 
ough, make  banking  as  free  and  allow  currency  notes  to  be  issued  to 
the  people  as  freely  and  at  the  lowest  possible  cost  that  is  consistent 
with  its  sure  current  redemption  in  specie  aud  the  sure  and  immediate 
payment  of  these  currency  notes  in  case  of  insolvency? 

Mr.  Fairchild.  That  is  my  idea. 

Mr.  Walker.  The  changes  should  allow  those  sections  of  the  coun- 
try where  interest  is  highest  to  make  the  same  relative  profit  on  the 
currency  issued  in  those  sections  as  is  made  in  the  lower-interest 
localities,  should  it  not? 

Mr.  Fairchild.  I  should  think  so,  most  decidedly. 

UNWISE  TO  ATTEMPT  BY  MANDATE  OF  LAW  TO  UNDERTAKE  TO  COM- 
PEL BANKS  TO   REDEEM  IN   GOLD. 

Mr.  Stallings.  Does  your  bill  provide  that  the  national  banks  shall 
redeem  their  notes  in  gold? 

Secretary  Gage.  It  does  not. 

Mr.  Stallings.  Do  you  think  it  ought  to? 

Secretary  Gage.  After  consideration  I  think  it  is  indifferent  whether 
it  does  or  not.  The  reason  I  did  not  put  it  in  was  that  I  do  not 
believe  the  Government,  as  an  issuer  of  notes,  ought  to  recognize  any 
money  on  earth  as  better  than  its  obligations,  or  discriminate  against 

189 


190       STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 

itself  or  its  obligations.  If  they  say  that  greenbacks  or  any  of  the 
Government's  obligations  are  not  good  enough  for  something,  but  gold 
is,  they  thereby  cast  a  reflection  upon  their  own  notes.  Besides,  I 
think  it  would  be  purely  immaterial.  If  you  make  the  banks  redeem 
in  gold,  then  the  banks  must  get  the  gold  to  redeem  with.  If  they 
have  the  obligations  of  the  Government,  you  may  make  it  necessary  for 
them  to  present  the  notes  to  the  Government  with  which  to  get  the 
gold  to  redeem  their  notes,  *  *  *  and  therefore  it  does  seem  to 
me  expedient  from  all  points  of  view,  practically  and  theoretically, 
not  to  put  that  in  the  law.  The  banks,  if  they  find  difficulty  in  main- 
taining other  forms  of  legal  money  that  will  discharge  debts,  will  have 
to  carry  gold.  They  have  now  in  their  possession  in  the  country  some 
$1140,000,000  of  that  kind  of  metal,  which  is  a  pretty  fair  supply  to  start 
with. 

Mr.  Hill.  *  *  *  Do  you  believe  that  it  would  be  a  wise  course 
to  pursue  to  make  all  bank  redemption  specifically  in  gold  coin,  elim- 
inating the  other  legal  tender  of  the  country — silver  and  the  lawful 
money,  silver  certificates'? 

Mr.  Fowler.  Limit  it  to  the  notes,  of  course,  and  not  the  deposits. 

Mr.  Fairchild.  My  idea  in  all  this  was  that  the  Government  should 
not  in  its  laws  discriminate  against  any  of  the  money  which  it  had  in 
circulation,  because  the  tendency  of  so  doing  was  to  drive  it  into  the 
Treasury. 

Mr.  Hill.  But  that  redemption  should  be  in  lawful  money? 

Mr.  Fairchild.  That  was  my  idea. 

GOLD  REDEMPTION  BY  GOVERNMENT  OF  ALL  PAPER  MONEY — 
TREASURY  REDEMPTION  IN  GOLD. 

Mr.  Brosius.  Now,  how  can  we  redeem  the  pledge  we  are  under  by 
existing  law  to  maintain  the  parity  of  our  money  unless  we  afford  some 
means  for  the  people  who  hold  paper  to  present  those  obligations  for 
redemption  in  gold? 

Secretary  Gage.  We  can  not.  I  understand  we  have  such  a  process 
now. 

Mr.  Brosius.  If  we  take  $200,000,000  of  the  $346,000,000  out  of  cir- 
culation and  hold  it  in  the  Treasury,  that  can  not  be  presented? 

Secretary  Gage.  No,  sir. 

Mr.  Brosius.  What  kind  of  demand  obligations  will  the  people  have 
to  present  to  the  Treasury  to  get  their  gold  ? 

Secretary  Gage.  They  will  have  $140,000,000  of  greenbacks.  They 
will  have  $100,000,000  or  more  of  Treasury  notes,  and  they  will  have 
$450,000,000  of  national-bank  notes.  They  could  not  present  them  to 
the  Treasury,  but  they  can  present  them  to  those  who  promise  to  pay. 

PARITY  TO  BE  MAINTAINED. 

Mr.  Brosius.  I  know  that;  but  the  Government  has  undertaken  to 
maintain  the  parity  of  all  our  money. 

Secretary  Gage.  Yes,  sir.  *  *  *  The  ability  of  the  Government 
of  the  United  States  to  maintain  the  parity  between  the  different  forms 
of  its  money  outstanding  depends  upon  its  ability  to  control  gold.  So 
far  as  it  can  reduce  the  obligations  that  are  outstanding,  so  far  it 
increases  its  strength  to  take  care  of  those  that  are  out. 

Mr.  Brosius.  Then  the  duty  that  we  have  undertaken,  to  maintain 


STRENGTHENING    THE    PUBLIC    CREDIT,   El  101 

the  i»:irity  of  gold  and  silver  and  all  our  money,  requires  that  the  people 
are  afforded  some  means  of  getting  gold  with  the  other  money  1 
\'rE.  The  means  1  look  at  it. 

Mr.  BllOSIUS.  Are  there  any  means  left  after  the  demand  obligations 
of  the  Government  are  taken  out  of  circulation  1 

ould  he  if  they  were  all  out. 
Mr.  BrosiUS.  What  way! 

retary  Gage.  The  way  would  be  for  people  to  present  their  obliga- 
tions to  the  national  bans 

UNDER   GAGE    BILL    THE    BA1  LD    REDEEM    THEIR    1 

HELVE     . 

Mr.  BSOSIUS.  The  'ill  does  not  make  it  their  du1 

tary  Gage.  To  do  wha 
Mr.  Brosius.  To  redeem  in  gold.    *    *    *    They  would  comply  with 
the  law  if  they  redeemed  in  silver. 

iry  '  rA'-K.  They  would.      2s'ow    you  have    struck  the  point. 

i  think  that  when  the  Go  ent  demand  obligations  are  out  it 

•will  have  no  function  in  maintaining  a  parity.     Jt  will  have  about  all 

the  function  it  wants  to  perform  in  kee]  100,000  in  silver  money 

of  the  United  States,  and  keeping  that  on  a  parity. 

Mr.  BBOSIU&  How? 

GOVERNMENT  WOULD   EXCHANGE  GOLD   FOR    SILVER  AND  FOE  BA] 

:..         r. 

tary  Gage.  By  exchanging  gold  for  it. 
Mr.  BSOSIUS.  A  gold  reserve  would  have  to  be  provided  for  that 
pur 

1    .GE.  I  think  SO. 
Mr.  Bi  Then,  all  the  paper  obligations  being  issued  by 

the  banks,  the  redemption  of  that  would  be  left  entirely  to  the  ban, 
-GE.  i  think 
Mr.  BBOSIUS.  And  then,  if  the  banks  refused  to  redeem  in  gold,  or 
were  unable  to  redeem  in  gold,  the  whole  :n  would  collapse,  and 

•  ould  go  to  a  silver  ba 
retar\  ..  I  can  not  quite  follow  you.     I  thought  you  a 

a  minute  ago 

The  Chairman.  I  think  I  can  put  a  question  right  there  that  will 
ieartbis.    The  c  of  retiring  th  put  it 

out  of  the  power  of  anyone  to  ose  tL     |2         10,000  to  ask  for  gold 
eruption. 

1  rAGE.  That  is  correct. 
The  Chairman.  It  leaves  out  in  circulation  all  ( 
I  the  Tre  what  Mr.  Brosius 

how  the  Govern  _      I  if  it   proposes  to  redeem   all  th 

:y  notes  and  Id. 

age.  Well,  that  is  another  question.     It  makes  little 
dit:  how  they  do  it.     I  provide  how  they  can  do  it  a  great  deal 

er  than  now. 
e  Chairman.  How! 

age.  There  would  ;  to  take  of. 

The  Chairman. 

.  < Jut  of  the  i  "A). 


192       STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 

Mr.  Prince.  How  many  million  dollars  will  the  bank  circulation 
reach  at  the  same  time? 

Secretary  Gage.  I  think  it  will  be  something  like  $500,000,000. 

Mr.  Prince.  That,  added  to  the  $730,000,000,  makes  $1,230,000,000. 
So,  if  the  banks  have  to  redeem  the  gold,  there  are  demand  notes  and 
in  circulation,  either  against  the  Government  or  the  banks,  for  which 
gold  can  be  demanded,  to  the  extent  of  $1,230,000,000? 

Secretary  Gage.  Yes,  sir. 

GOVERNMENT  TO  REDEEM  $1,230,000,000  PAPER  MONEY. 

Mr.  Prince.  Now,  you  say  that  if  the  banks  can  not  meet  this  and 
it  is  thrown  back  on  the  Government  the  Government  will  take  pos- 
session of  the  banks,  their  assets,  and  property,  and,  to  do  its  duty,  it 
would  redeem  this  $1,230,000,000  in  gold? 

Secretary  Gage.  Yes,  sir;  until  they  wound  up  business. 

GAGE  BILL  DRAINS  THE  TREASURY  OF  GOLD. 

Mr.  Hill.  How  have  you  released  the  Government  of  any  liability  of 
redemption  in  that  exchange  of  the  $200,000,000?  It  seems  to, me  you 
have  made  it  still  more  easy  to  drain  the  Treasury  of  gold.  For  instance, 
if  a  company  of  men  wish  to  get  $200,000,000  of  gold  from  the  Govern- 
ment, instead  of  getting  gold  for  greenbacks,  why  wouldn't  they  take 
bank  notes  and  redeem  them  in  lawful  money,  and  then  call  for  the  gold 
with  their  lawful  money? 

Secretary  Gage.  In  the  first  place,  they  would  have  to  get  the  lawful 
money.  They  have  to  find  that  lawful  money.  As  fast  as  these  notes 
are  presented  for  redemption,  the  difficulty  of  finding  the  lawful  money 
will  increase.  They  must  provide  the  lawful  money.  If  they  do  find  it, 
there  is  no  way  for  the  Government  to  escape  payment  of  its  lawful 
obligations. 

Mr.  Hill.  They  will  get  notes  or  silver,  will  they  not? 

Secretary  Gage.  From  whom? 

Mr.  Hill.  From  the  banks;  or  else  the  bank  fails. 

Secretary  Gage.  Yes,  sir;  and  if  the  bank  can  not  provide  legal- 
tender  notes,  Treasury  notes,  or  silver,  it  will  have  to  provide  gold.  It 
will  provide  that  which  is  easiest,  of  course,  as  anybody  else  will  do. 
But  I  contemplate  that  under  my  bill  I  will  diminish  the  lawful  money 
$200,000,000.     I  will  make  it  relatively  scarcer  than  it  is  now. 

Mr.  Cox.  When  the  bank  note  follows  its  process  along  until  it 
reaches  its  redemption  in  the  Treasury  of  the  United  States,  does  your 
bill  propose  to  redeem  that  bank  note  in  gold  or  other  money  at  the 
option  of  the  holder  of  that  note? 

Secretary  Gage.  In  the  case  you  suppose,  the  note  is  redeemed  at  the 
[bank]  counter. 

Mr.  Cox.  No;  they  refused  to  redeem  it. 

Secretary  Gage.  You  supposed  he  redeemed  it  in  a  greenback,  and 
he  took  the  greenback  and  went  to  the  Government. 

Mr.  Cox.  He  takes  the  note,  or  a  bundle  of  notes,  to  the  bank,  and 
the  bank  refuses  to  redeem  them  in  gold.  He  still  holds  those  notes. 
Now,  under  your  bill,  is  not  the  process  incorporated  into  this,  that  a 
man  can  have  those  bank  bills  redeemed  by  the  Government? 

Secretary  Gage.  Yes;  he  could  send  to  the  Government  and  get 
those  notes  redeemed. 


STRENGTHENING    THE    PURLIC    CREDIT,   ETC.  193 

Mr.  Cox.  I  so  understood  it  all  the  way  through,  Now,  be  could 
take  the  bank  notes,  the  bank  refusing  to  redeem  them  in  gold,  to  the 
Government — take  the  same  notes  to  the  Government — and  the  Gov- 
ernment would  be  bound  to  redeem  them  in  gold  if  he  demanded  it  .' 

Secretary  Gage.  It  would  be  bound  to  redeem  them  in  greenbacks 
or  gold;  yes.  He  could  take  the  greenbacks  and  turn  around  and  draw 
the  gold,  so  it  would  be  practically  a  redemption  in  gold. 

Mr.  Cox.  In  other  words,  he  could  take  the  notes  of  the  bank  and 
go  to  the  Treasury  of  the  United  Stales  and  the  Government,  under 
this  bill,  would  be  obliged  to  redeem  those  notes  in  gold  \ 

Secretary  GAGE.  Substantially,  yes. 

Hut,  miud  you,  the  Government  is  not  redeeming  those  notes  on  its 
own  account.  The  Government  is  redeeming  them  on  account  of  the 
bank. 

Mr.  Cox.  I  understand  that. 

Secretary  Gage.  Then  the  bank  would  have  to  account  to  the  Gov- 
ernment and  reimburse  it. 

GOVERNMENT  HAS  NO  CLAIM  FOR  GOLD  ON  THE  BANKS. 

Mr.  Cox.  Certainly,  and  I  take  it  that  the  Government  would  demand 
reimbursement  in  the  same  kind  of  money  the  Government  had  redeemed 
the  notes  in? 

Secretary  Gage.  No,  sir.  If  the  bank  had  satisfied  its  legal  liability 
to  the  Government  and  recouped  the  Government  with  any  form  of 
money  that  the  Government  recognized — greenbacks,  Treasury  notes, 
gold,  or  silver — that,  I  think,  would  be  sufficient. 

Mr.  Cox.  Then  the  Government,  in  the  first  step  of  redemption, 
redeemed  the  kind  of  notes  I  have  spoken  of  in  gold,  and  its  obliga- 
tion is  such  that  you  think  it  necessary,  to  maintain  the  parity,  to 
redeem  them  in  gold  if  the  holder  desires  gold;  but  when  the  bank, 
which  has  got  from  the  Government  the  benefit  of  banking,  comes  to 
pay  the  Government  the  bank  can  pay  the  Government  off  in  any  kind 
of  money? 

Secretary  Gage.  Whose  fault  is  that?  That  is  the  situation  the 
Government  is  in,  and  going  deeper  does  not  get  it  out. 

Mr.  Johnson.  What  law  is  there  to  require  the  Government  of  the 
United  States  to  redeem  national-bank  notes  in  gold? 

Secretary  Gage.  There  is  no  law;  but  we  have  to  redeem  them  in 
lawful  money.  We  have  to  redeem  them  in  something,  and  if  it  were 
so  that  a  holder  of  these  notes  could  go  to  another  window  and  secure 
gold,  it  would  be  substantially  as  Mr.  Cox  says. 

GOVERNMENT  GETS  THE  POOREST  MONEY. 

Mr.  Fowler.  Under  your  plan,  as  I  understand  it,  the  banks  of  the 
country  could  deposit  your  reserve  fund  in  either  greenbacks,  Treasury 
notes,  or  silver  certificates,  could  they  not? 

Secretary  Gage.  Yes,  sir. 

Mr.  Fowler.  Would  there  not  be,  under  the  pressure  now  felt  in 
this  country,  a  tendency  on  their  part  to  get  rid  of  the  poorest  of  tin-' 
three  kinds  of  money  and  instinctively  deposit  silver  certificates.    "Would 
not  that  be  the  tendency? 

Secretary  Gage.  That  would  be  the  tendency  unless  their  faith  iu 
those  notes  is  strengthened. 
B  &  c 13 


194  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

Mr.  Fowler.  Let  us  assume,  however,  in  going  through  this,  that  the 
banks  would  tend  to  pay  into  your  reserve  any  legal-tender  money,  say 
in  silver  certificates.  The  result,  then,  is  that  there  would  be  outstand- 
ing, mathematically,  $346,000,000  of  greenbacks,  $115,000,000  of  Treas- 
ury notes,  approximately;  and  you  have  left  8136,000,000  of  silver 
certificates  in  the  place  of  the  $200,000,000  of  silver  certificates  which 
have  been  deposited  by  the  banks  and  are  not  a  legal  tender  and  can 
not  draw  gold;  and  in  place  of  that  you  would  have  $200,000,000  of 
national-bank  notes,  would  you  not1? 

Secretary  Gage.  Outstanding?    On  your  hypothesis;  yes,  sir. 

Mr.  Fowler.  1  am  not  dealing  with  hypothetical  questions,  but  a 
sad  experience  which  we  have  had  in  the  last  three  years.  Let  us  go 
a  step  further.  If  it  is  true  that  you  have  added  to  the  abstractors 
$200,000,000  of  that  money,  which  to-day  makes  drafts  upon  the  Gov- 
ernment for  gold,  what  defense  has  the  Government  against  that  draft? 
You  have  stated  that  whenever  the  Government  attempts  to  recoup  for 
that  gold  which  it  has  paid  out,  the  bank  to  which  it  sends  its  notes 
can  then  pay  the  Government  in  lawful  money? 

Secretary  Gage.  If  it  has  it. 

Mr.  Fowler.  Would  it  not  be  the  most  natural  thing  in  the  world 
for  the  banker — and  I  am  asking  you  as  a  banker — to  send  in  silver, 
Treasury  notes,  or  certificates  rather  than  to  send  in  gold? 

Secretary  Gage.  It  would  depend,  as  I  have  said,  upon  two  consid- 
erations— what  relative  supply  he  had  of  each  and  what  respect  he 
had  for  them;  that  is,  his  confidence  in  them.  If  he  thought  the  gold 
was  safer  and  better  for  him  to  have  he  would  send  the  other  if  he  had  it 

PANIC  OF  1893. 

Mr.  Fowler.  That  is  the  point  exactly.  Now,  is  it  not  a  fact  that 
we  are  drafting  a  bill,  not  to  cover  normal  conditions,  but  to  cover 
crises,  aud  is  it  not  true  that  whenever  a  crisis  is  on,  such  a  crisis  as 
we  had  in  1S93,  practically  no  money  at  all  passes  between  people;  and 
if  it  were  thought  that  there  is  a  chance  of  the  Government  not  being 
able  to  redeem  its  obligations,  would  not  everybody  press  the  Treasury 
for  gold,  and  if  it  is  true,  is  it  not  true  also  that  every  bank  would 
reserve  its  gold  and  pay  out  its  paper  money? 

Secretary  Gage.  In  such  condition  of  distrust  of  the  standard,  yes, 
gjr#  *  *  *  I  do  not  know  how  to  avoid  the  risk  of  the  Government's 
responsibility  except  to  cancel  its  debts  and  not  owe  anything.  Then 
there  would  not  be  any  trouble  of  the  kind  you  suggest. 

The  Chairman.  I  wish  to  ask  you  whether  it  is  possible  to  use  paper 
money,  and  keep  it  at  all  times  equal  in  purchasing  power  to  the  specie 
it  represents,  without  having  the  coin  sure  of  easy  possession  for  the 
asking  in  exchanging  it  when  the  desire  for  it  arises? 

Secretary  Gage.  I  think  not. 

STOPPING  THE   MOVEMENT   OF  TnE  "  ENDLESS   CHAIN  "  PRODUCES 

PANIC. 

The  Chairman.  Then  any  device  that  hinders  or  in  any  way  delays 
oi  incites  in  the  mind  an  apprehension  that,  upon  desiring  to  exchange 
the  paper  money  for  the  specie  it  represents,  the  specie  may  be  refused 
or  the  obtaining  of  it  delayed,  tends  to  excite  a  desire  to  exchange  the 
paper  money  for  it  and  to  incite  a  panic? 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  l!>fi 

Secretary  Gage.  It  would  incite  distrust — that  is,  panic — and  lead 
to  a  pressure  for  specie. 

depreciating  the  price  of  bonds  the  only  way  to  protect 

<;old. 

The  Chairman.  I  prefer  to  use  the  word  "specie,"  you  understand. 
because  I  do  not  want  to  raise  the  question  of  coinage.  Is  it  not  a  fact 
that  there  are  scores  and  hundreds,  and,  in  the  ease  of  mortgages, 

slocks,  bonds,  and  all  things  that  easily  and  surely  transfer  wealth, 
thousands  and  millions  of  funds,  that  are  quickly  available,  which  are 
awaiting  the  depreciation  of  prices  of  such  securities  in  order  to  pur- 
chase them  at  less  than  their  normal  price? 

Secretary  Gage.  I  could  not  speak  very  authoritatively  on  that 
point. 

The  Chairman.  I  will  ask  Mr.  Fairchild  if  it  is  not  a  fact  that  there 
are  millions  upon  millions  of  funds,  quick  assets  in  banks,  that  are 
awaiting  the  depreciation  of  securities  to  purchase  them? 

Mr.  Fairchild.  Yes,  sir;  there  are  always  plenty  of  persons  willing 
to  buy  at  a  depreciated  price. 

The  Chairman.  There  is  an  immense  number  waiting  to  do  so? 

Mr.  Fairchild.  I  should  think  so. 

RAISING  THE  RATE  OF  DISCOUNT  WORKS  THE  DESTRUCTION  OF  THE 

DESIRE   FOR   GOLD. 

The  Chairman.  The  next  question  is,  that  the  only  principle  upon 
which  a  safe  and  free  issue  of  paper  money  redeemable  in  specie  can 
be  had  is  a  principle  that  will  work  the  destruction  of  a  desire  for  specie, 
when  it  arises  in  the  minds  of  the  holders  of  the  paper  money  that  rep- 
resents the  specie,  by  then  making  other  things  more  desirable  to  them 
than  the  specie.  Is  not  that  the  principle  on  which  the  Bank  of  Eng- 
land raises  the  rate  of  discount  and  protects  its  gold? 

Secretary  Gage.  I  should  say  it  is,  by  satisfying  the  desire  rather 
than  by  destroying  it.  That  is  the  only  amendment  I  should  make  to 
your  statement.     It  appears  in  the  form  of  statement. 

The  Chairman.    How  is  it  satisfied? 

Secretary  Gage.  Either  with  the  gold  itself  or  other  things  they 
prefer. 

The  Chairman.  Is  it  not  a  fact  that  they  will  insist  upon  having  the 
gold  unless  the  action  of  the  bank  is  such  as  to  depreciate  what  we  call 
solid  securities  to  a  point  where  they  will  prefer  to  buy  them — I  do  not 


» 


mean  individually,  but  as  a  class — rather  than  take  the  gold?  * 
Is  it  not  a  fact  that  the  raising  of  the  rate  of  interest,  when  conditions 
are  such  that  the  rate  of  interest  is  forced  up,  forces  down  the  price  of 
solid  securities,  and  that  solid  securities  are  shipped  from  one  country 
to  another  and  are  accepted  by  persons  rather  than  specie) 

Mr.  Faipciiild.  *  *  *  I  think  we  are  somewhat  misled  by  the 
raising  of  the  rate  of  interest  by  the  Bank  of  England.  It  does'  that 
specitically  to  protect  the  gold  it  has. 

The  CnAiRMArs.  My  point  is,  how  does  it  protect  the  gold  by  raising 
the  rate  of  interest? 

Mr.  Fairchild.  Just  as  it  diminishes  the  borrowing  demand.  The 
Bank  of  England  raises  the  rate  of  interest  because  the  borrowing 
increases,  and  the  result  of  that  is  to  diminish  the  call  upon  the  funds 
of  the  Bank  of  England,  and  all  of  the  funds  of  the  Bank  of  England 


196  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

being  gold,  the  result  is  to  diminish  the  call  upon  the  gold  in  the  Bank 
of  England.  Now.  in  this  country  the  same  thing  takes  place  when  a 
man  borrows  a  million  dollars  to  pay  a  debt  abroad.  It  makes  a  dimi- 
nution of  the  loanable  funds,  and  that  of  itself  works  an  increase  in 
the  rate  of  interest,  and  when  that  rate  of  interest  becomes  large  enough 
the  seller  of  exchange,  instead  of  meeting  his  remittances  by  the  actual 
shipment  of  gold,  finds  a  cheaper  way  to  meet  his  bill  of  exchange. 
Secretary  Gage.  I  agree  with  what  Mr.  Fairchild  has  said,  but  I  do 
not  think  either  of  us  yet  has  specifically  answered  your  question.  I 
am  willing,  for  my  part,  to  say  the  raising  of  the  rate  of  interest  tends 
to  depress  the  price  of  securities  and  tends  to  depress  the  price  of  com- 
modities. 

BANKS    RAISE    THE    RATE    OF    INTEREST    BECAUSE    COMPELLED    TO 

DO   SO. 

The  Chairman.  Then  the  raising  of  the  rate  of  interest  by  the  Bank 
of  England,  or  the  banks  of  New  York,  or  of  Chicago,  taking  large  cities 
first,  is  compelled  by  the  financial  situation.  It  is  not  a  matter  that 
they  control,  but  they  are  compelled  to  do  so  to  protect  their  deposits 
and  to  protect  the  banks.     Is  not  that  so? 

Secretary  Gage.  That  is  undoubtedly  so. 

The  Chairman.  That  the  bank  officers  do  not  by  their  own  motion 
force  up  the  rate  of  interest,  but  they  defend  themselves  and  defend 
their  institutions  from  having  their  funds  depleted  by  raising  the  rate 
of  interest,  and  are  compelled  to  do  so  by  the  situation  ? 

Secretary  Gage.  Yes,  sir;  and  it  is  operated  upon  by  the  law  of 
supply  and  demand  in  regard  to  loanable  funds. 

LEGAL   RATES   OF  INTEREST. 

The  Chairman.  Is  it  not  a  fact  that  the  rates  are  never  put  high 
enough  to  prevent  the  loan  of  the  funds  of  the  banks  up  to  a  safe 
limit,  under  existing  conditions? 

Mr.  Fairchild.  It  never  will  be  high  so  long  as  there  are  funds 
which  it  is  safe  for  a  bank,  or  a  number  of  banks  (if  there  are  a  number 
in  a  place),  to  loan. 

RAISING  THE   RATE   OF  INTEREST  PROTECTS  GOLD. 

The  Chairman.  Is  it  not  a  fact,  Mr.  Fairchild,  that  the  desire  for 
taking  gold  or  anything  else  for  shipment  is  an  economic  desire — unless 
it  is  a  miserly  desire,  which  we  do  not  consider  in  this  discussion — and 
when  the  rate  of  interest  is  raised  it  depreciates  the  price  of  securities 
so  that  it  checks  the  economic  demand  for  gold,  and,  added  to  that,  is 
it  not  a  fact  the  raising  of  the  rate  of  interest  by  the  Bank  of  England 
has  been  effective  through  all  these  years  in  protecting  its  gold? 

Mr.  Fairchild.  The  raising  of  the  rate  of  interest  in  England  by 
the  Bank  of  England  as  an  indication  and  exponent  protects  the  gold 
in  England. 

The  Chairman.  Is  it  not  a  fact  that  the  raising  of  the  rate  of  inter- 
est of  the  Bank  of  England  in  the  last  ten  years  has  always  protected 
the  gold,  for  the  reason  men  desire  wealth  for  the  income  upon  it,  and 
that  as  the  price  of  solid  securities  goes  down  the  income  increases  or 
the  securities  are  shipped  and  accepted  in  place  of  gold,  and  that  is 
what  protects  the  gold  in  the  Bank  of  England? 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  197 

Secretary  Gage.  I  think  that  is  correct. 

]\Ir.  BROSIUS.  In  the  Bank  of  England  tbe  rate  has  been  as  high  as 
10  per  cent? 

Secretary  Gage.  Twice  in  my  lifetime. 

Mr.  BEOSIUS.  In  nearly  every  State  there  is  a  legal  rate  of  interest, 
and  under  our  banking  law  no  national  bank  in  any  Slate  can  exceed 
the  legal  rate  of  interest  there,  so  that  there  must  be  considered  as  a 
maximum  rate  of  discount  a  great  many  different  rates  in  the  different 
States  of  the  Union? 

Secretary  Gage.  You  are  right,  except  as  to  the  State  of  New  York, 
where,  I  believe,  on  demand  loans  on  securities  there  is  no  limit  as  to 
the  rate  of  interest.     Am  I  correct,  Mr.  Fairchild? 

Mr.  Fairchild.  On  securities. 

Mr.  Urosius.  Let  me  understand  that. 

Sec/<jfc<i?y  Gage.  And  in  Massachusetts  I  think  there  is  no  legal 
rate. 

The  Chairman.  There  is  a  legal  rate  in  Massachusetts  and  in  New 
York  when  there  is  no  agreement  made,  but  men  have  the  right  to 
make  any  agreement  they  choose. 

Secretary  Gage.  1  so  understand. 

Mr.  Johnson.  On  call  loans.' 

The  Chairman.  On  any  loan. 

Mr.  Fowler.  I  would  like  to  have  brought  out  the  fact  that  on  call 
loans  in  New  York  there  is  an  exception  to  the  statutory  rate.  Now, 
one  question  upon  the  matter  of  raising  the  rate:  Is  it  not  true,  gentle- 
men, that  after  the  rate  rises  to  a  certain  point  it  is  simply  a  question 
whether  a  large  number  of  people  who  might  profitably  borrow  at  a 
lower  rate  do  not  borrow  at  the  higher  price  because  it  will  not  be  a 
profit  to  do  so? 

Secretary  Gage.  It  operates  that  way. 

Mr.  Hill.  Connecticut  has  no  rate  unless  it  is  fixed  in  the  contract. 

Mr.  McCleary.  Inasmuch  as  New  York  is  the  point  of  export,  I 
wish  to  ask  whether  the  rate  in  New  York  will  not  govern  alter  all? 
And,  therefore,  are  the  rates  of  the  several  States  very  material  in  the 
case? 

Mr.  FAlRCnTLD.  I  say  that  under  present  conditions  I  should  sup- 
pose New  York  woidd  largely  determine  the  rate,  although  I  might  say 
that  Chicago  has  lately  been  loaning  a  good  deal  of  money  in  Europe. 
So  probably  the  two  go  very  much  together;  but  New  York  would  very 
largely  intluence  it. 

PEOPLE  HAVE  NO  DESIRE  FOR  GOLD. 

The  Chairman.  Wherever  men  are  controlled  by  economic  consid- 
erations the  desire  of  meu  is  for  wealth  which  affords  them  an  income, 
and  therefore  specie  is  never  desired  or  even  accepted  in  payment 
except  for  the  purpose  of  selling  it  at  a  premium  or  for  safety. 

Secretary  Gage.  That  is  a  fair  statement  of  fact. 

The  Chairman.  The  whole  system  of  using  paper  money  depends 
upon  the  instant  and  sure  redemption  in  coin  by  the  issuer  of  it? 

Secretary  Gage.  Upon  perfect  confidence  in  the  coin  redemption. 

The  Chairman.  Let  me  ask  a  second  question,  which  is  developed 
by  this.  In  order  that  paper  money  may  be  safely  issued  and  used,  is 
it  not  necessary  that  the  issuer,  directly  or  indirectly,  be  the  redeemer 
of  it? 

Secretary  Gage.  I  think  so. 


198  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

THE   ENDLESS  CHAIN. 

The  Cn airman.  Now  we  strike  something  that  has  been  talked  of  in 
the  country — that  a  fitting  illustration  of  this  process  is  an  endless 
chain  that  never  ceases  for  an  instant  to  move  potentially  or  actually, 
and  anything  that  impairs  any  link  in  the  chain  does  it  injury. 

Secretary  Gage.  Your  question  involves  figures  of  speech  which  fail 
always  to  carry  exact  ideas;  but  if  I  catch  your  thought 

The  Chairman.  Can  you  suggest  a  more  apt  illustration  of  the  nec- 
essary inevitable  constant  flow  of  currency  in  and  out,  coming  in  con- 
tact potentially  with  the  specie  it  represents,  than  an  endless  chain 
which  never  ceases  for  an  instant  to  move  potentially  or  actually,  and 
that  anything  that  impairs  any  link  of  the  chain  does  the  currency 
system  injury?  Can  either  of  you  gentlemen  suppose  a  more  apt 
illustration  ? 

Secretary  Gage.  I  think  there  are  a  dozen  you  might  use. 

The  Chairman.  Will  you  suggest  any  one  of  the  dozen? 

Secretary  Gage.  Say  individual  buckets.  We  have  adopted  the  end- 
less chain  as  a  figure  of  speech,  which  probably  conveys  nearly  the  idea 
involved,  namely,  that  whoever  has  demands  against  the  Government 
or  anyone  else  can  take  those  demands  and  have  them  realized  in 
redemption  money,  in  specie.  If  these  obligations  are  again  issued,  the 
new  holder  can  do  the  same,  and  so  there  is  a  sort  of  circle  established; 
or  it  may  be,  on  the  one  hand,  the  notes  flow  out,  and  in  the  course  of  the 
movement  of  trade  or  commerce  or  distrust  the  notes  come  back  in  a 
circular  movement.  That  is  not  a  horrible  thing;  it  is  natural,  rea- 
sonable, and  proper,  and  the  issuer  should  never  complain.  Let  him 
meet  his  liabilities  on  demand. 

The  Chairman.  Is  not  that  what  will  take  place  in  making  a  redemp- 
tion fund? 

Secretary  Gage.  I  think  it  is. 

The  Chairman.  Can  you  suggest  anything  further,  Mr.  Fairchild? 

Mr.  Fairchild.  No,  sir;  I  think  that  is  perfectly  true. 

The  Chairman.  Assuming  that  there  will  be  a  recurrence  of  the 
distress  of  1803,  is  it  possible  in  such  a  situation  and  under  such  con- 
ditions to  avoid  an  endless  chain,  as  long  as  we  have  any  obligations 
we  redeem  in  gold  ? 

Secretary  Gage.  No,  sir.  You  may  sometimes  make  a  strong  endless 
chain  and  sometimes  a  feeble  one.  As  long  as  there  is  a  dollar  of  obli- 
gation of  the  Government  out,  that  dollar  can  be  presented  to  tire  Gov- 
ernment. If  it  is  redeemed  and  paid  out  it  can  be  presented  again,  and 
can  be  presented  as  many  times  as  it  is  paid  out.  That  can  be  done 
with  only  one  dollar. 

GOLD  TAKEN  OUT  OF  THE  TREASURY  IS  LOST  FOR  USE  IN  REDEEM- 
ING PAPER  MONEY. 

The  Chairman.  Is  it  not  a  fact  that  gold  taken  out  of  the  Treasury 
goes  into  the  possession  of  forces  antagonistic  to  the  Treasury,  and  that 
gold  taken  from  a  bank  is  immediately  returned  to  some  other  bank 
and  is  kept  in  the  banking  system,  and  the  gold  is  not  lessened  in 
quantity?  It  is  lessened  in  quantity  by  just  that  amount  taken  out  of 
the  Treasury  which  is  available  for  redemption,  while  in  the  banks  it  is 
not  lessened  at  all  ? 

Mr.  Fairchild.  Yes. 

Mr.  Johnson.  In  one  sense  the  endless  chain  is  not  an  evil.    It  is 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  199 

essential  in  the  construction  of  a  currency  system  that  there  should  be 
a  presentation  of  the  demand  notes  for  redemption,  but  the  evil  lies  in 
the  fact  that  the  Government  does  not  possess  the  banking  facilities  to 
enable  it  to  meet  these  demand  notes  without  undue  stress. 

Mr.  Fairciiild.  Yes;  the  Government  funds  are  constantly  being 
depleted  and  never  replenished  in  the  ordinary  course  of  its  business, 
while  with  the  bank  transactions  which  call  for  the  issue  of  its  demand 
obligations  contain  the  means  for  their  payment. 

GOVERNMENT   CAN   NOT   SAFELY  ISSUE  PAPER  MONEY. 

Now,  when  the  Government  issues  its  demand  obligations  the  trans- 
action which  issues  them  contains  no  means  whatever  for  their  payment. 

Mr.  Johnson.  That  is  the  very  point  I  wanted  to  develop,  wherein 
the  work  of  the  Government,  as  a  bank  issuing  circulating  notes,  differs 
from  a  well  constituted  bank. 

Mr.  Fowler.  The  counterpart  of  any  credit  note  that  is  issued  by  a 
Government  or  a  bank  is  that  it  shall  be  currently  redeemed  in  some- 
thing of  real  value  as  a  measure,  in  order  that  its  soundness  may  be 
tested  every  hour  if  necessary? 

THE  ENDLESS  CHAIN  GOOD  AND  NOT  EVIL. 

Secretary  Gage.  In  order  that  a  condition  of  health  may  prevail. 
Suppose  that  with  a  bank  the  same  circular  movement  of  gold  goes  on 
that  was  spoken  of  a  little  while  ago.  The  probability  is  that  every 
bank  in  every  money  center  redeems  every  day  from  10  to  15  per  cent 
of  its  liabilities,  creating  new  liabilities  to  someone  else,  and  the  next 
day  liquidating  again  and  again,  always  new  creditors  settling  and 
satisfying  former  creditors.  There  is  a  substantial  redemption  of  a 
bank's  liabilities.  A  bank's  notes  are  not  different  in  their  essential 
character  from  the  bank's  deposits.  They  are  the  same  in  their  nature 
and  are  governed  by  the  same  general  principles. 

SELL  BONDS  TO  MAINTAIN  PARITY. 

Mr.  Brosius.  Do  you  think  that  the  parity  of  all  our  money  under 
all  circumstances  could  be  maintained  without  the  direct  interchange 
of  gold  for  silver,  in  case  the  holder  of  the  silver  demands  it,  and  does 
not  your  commission  bill  proceed  upon  the  assumption  that  gold  will 
be  given  for  silver  when  demanded? 

Mr.  Fairchild.  We  provide  in  our  bill  that  it  shall  be  so  given. 

Mr.  BROSIUS.  That  is  direct  interchange,  is  it  not? 

Mr.  Fairchild.  That  will  be  direct  interchange;  yes,  sir. 

Mr.  Brosius.  Cau  the  parity  of  silver  and  gold  be  maintained  under 
all  circumstances  without  that  direct  interchange? 

Mr.  Fairchild.  I  should  say  not  so  surely,  under  all  circumstances. 

Mr.  Brosius.  And  therefore  you  have  provided  for  that  in  your  bill? 

Mr.  Fairchild.  Yes. 

.Mr.  Taylor.  By  the  terms  of  this  bill  a  bank  has  to  pay  its  deposi- 
tors in  some  kind  of  lawful  money.  It  may  pay  greenbacks,  and  when 
they  are  gone  it  may  pay  them  in  silver.  If  it  pays  them  in  silver,  the 
United  States  stands  ready  to  exchange  gold  for  the  silver,  so  the  cur- 
rency of  the  country  rests  upon  such  a  basis  that  men  will  not  only  be 
able  to  obtain  gold  when  they  want  it,  but  they  can  compel  it  when 
they  waut  it. 


2 (JO  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

Mr.  Cox.  Here  is  a  depositor  in  a  bank  who  has  a  thousand  dollars 
deposited.  He  calls  upon  the  bank  to  make  good  that  deposit.  The 
bank  has  to  make  it  good  in  gold  or  silver.  If  they  make  it  good  in 
gold,  that  is  the  end  of  it.  If  the  bank  pays  him  in  silver,  then  the 
man  can  take  the  silver  and  go  to  the  Treasury  and  get  the  gold.  Is 
that  correct? 

Mr.  Taylor.  Yes,  sir. 

Mr.  Cox.  Xow,  he  leaves  the  silver  there  in  the  place  of  the  gold. 
The  difficulty,  in  my  mind,  lies  in  this.  With  that  kind  of  process 
where  is  the  Government  to  get  the  gold  to  redeem  that  silver  or 
exchange  it? 

Mr.  Taylor.  Just  as  it  does  now.  By  its  revenues,  when  they  are 
sufficient,  and  when  that  is  not  sufficient  by  borrowing. 

UNITED    STATES    NOTES    DESTROYED    BY    SECRETARY    GAGE    IN 
MAKING  THEM   GOLD   CERTIFICATES. 

The  Chairman.  Mr.  Secretary,  you  have  said  that  if  you  had  in  the 
issue  and  redemption  department  $200,000,000  of  greenbacks  to-day — 
and  I  suppose  you  include  the  $125,000,000  of  gold  out  of  the  general 
Treasury,  making  $325,000,000 — that  the  banks  would  immediately,  you 
think,  bring  gold  to  the  Treasury  for  the  greenbacks? 

Secretary  Gage.  I  think  so. 

The  Chairman.  Why  should  they  not  bring  the  whole  $200,000,000 
they  now  have  to  take  the  greenbacks  ? 

Secretary  Gage.  Perhaps  they  would.  I  am  naturally  conservative 
in  my  estimates. 

The  Chairman.  It  would  be  to  their  interest  to  do  so,  would  it  not? 

Secretary  Gage.  I  think  it  would. 

The  Chairman.  Then,  assuming  that  there  are  $21,000,000  of  green- 
backs— I  believe  that  is  the  estimate,  somewhere  from  $15,000,000  to 
$25,000,000 — destroyed,  you  would  have  either  greenbacks  in  this  issue 
and  redemption  fund  or  gold  to  make  up  the  $325,000,000  ? 

Secretary  Gage.  Yes,  sir. 

The  Chairman.  Then  that  makes  the  greenback  purely  and  abso- 
lutely a  gold  certificate? 

Secretary  Gage.  It  makes  it  essentially  so.  I  do  not  think  it  makes 
it  purely  and  absolutely  so. 

EX-SECRETARY  FAIRCHILD. 

[Mr.  Fairchild  proposes  to  destroy  legal  tenders  and  have  no  paper 
money  under  $10,  except  $200,000,000  in  silver  certificates,  and  then 
banks  can  not  get  these  certificates.] 

The  Chairman.  You  propose  a  destruction  of  the  greenbacks,  and 
to  substitute  for  the  greenbacks  drawing  gold  from  the  Treasury  the 
silver  dollar? 

Mi.  Fairchild.  Yes,  sir. 

The  Chairman.  Then  you  do  not  propose  to  have  any  means  of  reach 
ing  the  gold  in  the  Treasury  after  you  have  destroyed  the  greenbacks? 

EXCHANGE   GOLD   FOR  SILVER. 

Mr.  Fairchild.  We  propose  that  the  Government  shall  keep  the  sil- 
ver dollars  equal  to  gold. 
The  Chairman.  How  are  you  groin g  to  do  that? 
Mr.  Fairchild.  By  giving  gold  when  anybody  wants  it;  and  we  cal- 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  201 

cnlate  that  an  amount  of  gold  kept  in  the  Treasury  equal  to  5  per  cent 
of  the  silver  dollars  in  existence  will  suffice  for  that  purpose. 

The  Chairman.  If  you  propose  to  redeem  the  silver  dollars  in  gold  by 
the  Treasury,  you  propose  to  redeem  them  ou  demand? 

Mr.  Fairchild.  Yes,  sir;  on  demand. 

Mr.  Hill.  I  would  like  to  ask  a  question  now  in  regard  to  the  ques- 
tions asked  by  Mr.  Cox.  When  this  bill  is  in  operation  and  effect,  we 
will  have  three  kinds  of  currency — gold,  silver,  or  silver  certificates, 
and  bank  notes — and  that  is  all? 

Mr.  Fairchild.  Yes,  sir. 

NO   PAPER  UNDER  $10,  EXCEPTING  SILVER  CERTIFICATES. 

Mr.  Hill.  Now,  as  I  understand  the  proposition  of  the  commission, 
they  think  that  the  silver  certificates  under  $10  taking  the  place  of 
the  present  national  bank  notes  under  $5  in  denomination,  and  Gov- 
ernment currency,  will  be  so  firmly  held  that  not  even  a  panic  will 
bring  them  to  the  Treasury  for  redemption? 

Mr.  Fairchild.  Yes,  sir. 

Mr.  Hill.  So,  practically,  for  redemption  money,  there  will  be  gold? 

Mr.  Fairchild.  Yes,  sir. 

Mr.  Hill.  Practically  all? 

Mr.  Fairchild.  Yes,  sir. 

Mr.  Hill.  It  will  be  used  for  redemption  of  bank  notes,  and  there 
will  be  less  silver  dollars  in  circulation,  but  more  silver  certificates  in 
circulation  as  a  matter  of  convenience? 

Mr.  Fairchild.  I  could  not  say. 

Mr.  Hill.  That  will  be  the  working  of  it.  Now,  I  wanted  to  ask  you 
this  question :  Suppose  a  war  to  come,  or  some  great  demand  for  gold, 
is  there  any  possible  way  in  which  that  demand  could  be  brought  to 
bear  upon  the  Treasury? 

Mr.  Fairchild.  No,  sir. 

BANKS   CAN  NOT   GET   SILVER. 

Mr.  Hill.  Being  unable  to  accumulate  any  reasonable  amount  of 
silver  certificates  or  dollars,  must  not  that  gold  be  secured  by  taking 
national-bank  notes  to  the  banks  for  gold  redemption  ? 

Mr.  Fairchild.  Yes,  sir. 

Mr.  Hill.  And  they  will  regulate  that  matter  by  the  operation  of  the 
rise  and  fall  of  interest,  as  is  now  done  in  England. 

>\Ir.  Fairchild.  Exactly. 

The  Chairman.  Then  you  propose  in  your  system  to  put  the  power 
of  demanding  the  gold  of  the  Government,  the  redeeming  of  money  in 
gold,  beyond  the  power  of  the  people  to  reach;  that  is  your  point  in 
the  bill  ! 

Mr.  Hill.  It  puts  it  on  the  banks. 

The  Chairman.  No,  sir;  I  beg  your  pardon. 

Mr.  Fairchild.  I  do  not  understand  your  question.  I  do  not  under- 
stand the  assumption. 

TO  DEMAND  GOLD  PUT  OUT  OF  THE  POWER  OF  THE  PEOPLE. 

The  Chairman.  Your  answer  to  the  question  of  Mr.  Hill  was  that 
the  silver  would  be  so  absorbed  that  it  was  not  practicable  to  get  the 
silver  with  which  to  demand  gold  I 

Mr.  Fairchild.  Certainly. 


202  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC 


The  Chairman.  That  is  your  first  proposition? 

Mr.  Fairchild.  Yes,  sir. 

The  Chairman.  Now,  your  second  proposition  is  that  there  is  then 
nothing  left  in  the  community  that  they  can  get  to  bring  to  the  Gov- 
ernment to  secure  gold? 

Mr.  Fairchild.  Nothing  whatever  left. 

Tbe  Chairman.  Then  what  institution  of  individuals  is  to  keep  all 
of  our  money  at  par,  each  with  every  other? 

Mr.  Fairchild.  The  people  who  issue  it. 

The  Chairman.  But  where  is  the  provision  in  law  that  anybody 
shall  redeem  it  in  gold? 

Mr.  Fairchild.  They  can  not  redeem  it  in  anything  else. 

The  Chairman.  The  gold  is  to  be  in  the  Treasury? 

Mr.  Fairchild.  It  would  not  be  in  the  Treasury. 

BANKS  NOT  REQUIRED  TO  REDEEM  IN  GOLD. 

The  Chairman.  Do  you  provide  by  law  that  the  banks  shall  redeem 
in  gold? 

Mr.  Fairchild.  Not  at  all.    In  lawful  money. 

The  Chairman.  And  your  bill  destroys  the  greenbacks? 

Mr.  Fairchild.  Yes,  sir. 

The  Chairman.  And  you  claim  that  the  silver  dollars  will  not  be 
stored  by  the  banks  so  they  can  get  gold,  as  they  now  store  greenbacks. 
Why  will  not  the  desire  and  the  practice  of  the  banks  be  to  keep  the 
silver  dollars  to  get  the  gold,  precisely  as  they  now  keep  the  greenbacks  ? 

Mr.  Fairchild.  Because  the  people  must  have  them  for  use  in  their 
trade  and  business. 

The  Chairman.  That  is,  you  propose  to  make  the  getting  of  small 
money  so  difficult  that  the  banks  can  not  hoard  it — can  not  keep  it  to 
get  gold  for?    *    *     * 

SILVER  MUST  GO  INTO   BANKS. 

The  Chairman.  Is  it  not  a  fact  that  this  silver  money,  when  it  is 
paid  in  the  natural  course  of  retail  trade,  will  be  paid  to  the  store- 
keepers for  goods  that  the  people  buy? 

Mr.  Fairchild.  Yes,  sir. 

The  Chairman.  That  is  the  use  that  will  be  made  of  it? 

Mr.  Fairchild.  Yes,  sir;  paid  for  car  fares  and  hotel  bills,  and  all 
kinds  of  things. 

The  Chairman.  Then  the  answer  to  my  question  is  that  it  will  be 
paid  by  people  in  the  retail  purchases  of  the  things  they  want? 

Mr.  Fairchild.  Yes,  sir. 

The  Chairman.  Now,  is  it  not  the  custom  of  all  merchants,  railroad 
companies,  big  merchants  and  small,  to  deposit  that  money  in  the  bank? 

Mr.  Fairchild.  It  is. 

The  Chairman.  Then  is  it  not  the  custom  to-day  for  the  banks  to 
accumulate  the  greenbacks,  retaining  them  and  paying  out  something 
else? 

Mr.  FAiRcniLD.  Yes,  sir. 

The  Chairman.  Then  will  it  not  be  the  custom  of  the  banks,  under 
your  proposed  law,  in  order  to  have  something  that  is  the  equivalent  of 
gold  tor  which  to  secure  gold  to  redeem  their  bills,  to  keep  the  silver 
certificates  to  demand  gold  for? 

Mr.  Fairchild.  It  will  not. 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  203 

The  Ciiatrman.  Why? 

Mr.  Fairchild.  Because  there  will  not  be  enough  of  it. 

The  Chairman.  Well,  I  am  done. 

Mr.  Hill.  They  will  retain  gold? 

Mr.  Fairchild.  Of  course  they  will. 

The  Chairman.  Then  you  fix  the  tiling  so  that  nobody  can  get  any 
money  on  which  to  demand  gold  except  bank  notes? 

Mr.  FAiRcniLD.  That  is  absolutely  the  ease. 

Mr.  Cox.  Your  theory,  then,  is,  so  far  as  the  silver  is  concerned,  that 
it  will  be  put  out  in  circulation  and  in  the  hands  of  the  people,  and  con- 
sequently the  banks  can't  concentrate  it  so  as  to  draw  gold  from  the 
Treasury? 

Mr.  Fairchild.  Yes,  sir. 

REDEMPTION  OF  UNITED  STATES  NOTES — UNDER  WALKER  BILL 
BANKS  ASSUME  UNITED  STATES  NOTES  EQUAL  TO  12£  PER  CENT 
OF   THEIR  CAPITAL. 

Mr.  Fairchild.  I  do  not  get  very  clearly  in  my  mind  how  you  relieve 
the  Government  of  the  greenbacks  and  the  greenbacks  still  remain, 
making  the  banks  responsible  for  them.  Where,  then,  do  you  differ- 
entiate them  from  the  other  notes,  as  to  reserves  and  liabilities?  How 
do  you  arrive  at  that? 

Mr.  Walker.  Arrive  at  their  current  redemption? 

Mr.  Fairchild.  Y'es. 

Mr.  Walker.  By  requiring  banks  to  deposit  in  lawful  money  in  the 
Treasury  a  sum  equal  to  12i  per  cent  of  their  capital  and  destroy  the 
existing  greenbacks  to  the  same  amount  and  issue  to  the  banks  a  new 
print  of  the  greenbacks  with  their  own  bill  printed  on  the  back  of 
them,  which  they  shall  sign  and  execute  as  though  it  were  only  their 
own  note,  and  it  is  legal  tender  to  everybody  as  now — every  bank  and 
every  individual — except  to  the  bank  that  takes  and  issues  them.  They 
will  be  the  same  as  a  Bank  of  England  note.  They  are  legal  tender 
everywhere  except  at  the  bank  whose  note  is  printed  on  the  back  of 
them.  That  takes  $200,000,000,  and  the  bill  further  provides  that  that 
amount  shall  never  be  increased,  but  that  the  percentage  of  12*  shall 
be  reduced.  It  does  not  mention  $200,000,000,  but  that  is  what  it 
comes  to.  When  that  is  once  done,  12J  per  cent  will  never  be  increased, 
but  on  the  contrary  may  be  reduced. 

Mr.  Fairchild.  If  I  apprehend  your  question,  it  seems  to  me  that 
that  is  making  a  legal  tender  again  of  somebody's  credit,  and  while 
that  is  economical,  or  might  be  economical,  and  we  might  like  to  limit 
it,  I  am  afraid  of  the  idea.  I  do  not  know  that  I  do  comprehend  the 
idea  fully,  but  if  I  do,  I  am  afraid  of  the  idea  of  making  anybody  take 
anybody's  promise  to  pay  if  he  does  not  want  to  take  it.  That  would 
be  my  objection  to  your  idea,  if  I  understand  it. 

THE   PEOPLE  "WISH   TO   KEEP   THE   GREENBACKS. 

Mr.  Walker.  The  point  is  that  the  people  insist  on  retaining  the 
legal-tender  notes  and  refuse  to  withdraw  them. 

Mr.  Fairchtld.  Under  our  bill  they  remain  if  the  people  do  not  want 
to  have  them  paid. 

Mr.  Walker.  Do  you  mean  all  the  people  or  the  people  who  are  the 
bankers?    This  becomes  a  political  question. 

Mr.  Fairchild.  Anybody  who  holds  them  may  refrain  from  present- 


204  STRENGTHENING*   THE    PUBLIC    CREDIT,   ETC. 

ing  them  for  payment  in  gold  if  they  prefer  to  have  them;  and  my 
opinion  would  be,  as  I  have  already  expressed  it,  that  having  once 
established  our  principle  they  would  be  retained  certainly  during  the 
ten  years,  and  even  after  they  cease  to  be  a  legal  tender  they  would  be 
performing  a  very  large  function. 

Secretary  Gage.  Mr.  Walker,  I  would  like  to  ask  you  a  question  or 
two  on  that  point. 

Mr.  Walker.  Certainly. 

Secretary  Gage.  Your  proposition  is  equivalent,  as  I  understand  it, 
to  the  banks  loaning  the  Government  of  the  United  States  12J  per 
cent  of  the  amount  of  their  circulating  notes  free  of  interest,  substan- 
tially. 

NOT  A  LOAN  TO  THE  GOVERNMENT,  BUT  A  CONVENIENCE  TO  THE 

BANKS. 

Mr.  Walker.  No,  not  at  all;  because  if  it  was  to  a  greater  amount 
it  might  be,  but  being  at  an  amount  so  small,  only  one-quarter  of  the 
cash  reserve  that  the  law  requires  them  to  keep,  and  being  all  taken 
up  in  the  reserve,  and  the  coin  reserve  being  ample  without  that,  they 
being  treated  as  coin  and  performing  all  the  work  of  coin,  it  is  equiva- 
lent to  allowing  banks  the  liberty  of  using  their  own  paper  in  the  place 
of  gold.  The  bill  is  drawn  upon  that  theory,  and  allows  the  bank  with 
50  per  cent  of  greenbacks  to  take  out  50  per  cent  of  currency,  but  when- 
ever the  bill  gets  into  full  operation,  it  may  take  100  per  cent  the  same 
as  a  bank  with  12^  per  cent,  upon  the  theory  that  this  was  worth  to  the 
banks  in  practice  as  much  as  the  gold. 

Secretary  Gage.  Still,  it  would  remain  true  that  the  Government 
would  get  the  advantage  of  $200,000,000  without  interest? 

Mr.  Walker.  Certainly. 

COST  BANKS  NOTHING. 

Secretary  Gage.  The  only  difference  is  that  it  would  be  furnished  by 
the  banks  without  any  sacrifice  or  cost? 

Mr.  Walker.  Yes. 

Secretary  Gage.  Since  it  would  go  into  the  bank  reserves,  being 
available  to  them  in  an  ultimate  case? 

Mr.  Walker.  It  would  never  be  circulated  at  all.  It  would  take 
them  from  circulation  as  much  as  your  system  or  Mr.  Fairchild's. 

Secretary  Gage.  They  probably  would  not  be  circulated,  but  if  they 
were  paid  out  the  bank  would  have  to  redeem  them  and  it  would  be  as 
much  a  charge  on  them  as  if  they  were  their  own  notes.  Therefore,  is 
it  worth  while  to  go  through  the  machinery  of  those  notes?  Would  it 
not  be  better  for  the  banks  to  lend  the  Government  $200,000,000  for  the 
privilege  of  issuing  their  own  notes? 

PARITY  MAINTAINED  BY  BANKS. 

Mr.  Walker.  It  absolutely  relieves  the  United  States  Treasury  from 
all  responsibility  for  redemption,  for  my  bill  provides  that  all  the  banks 
shall  pay  a  penalty  tax  of  one-half  of  1  per  cent  on  their  deposits  if  they 
fail  to  maintain  the  parity  between  the  four  kinds  of  money — the 
national-bank  notes,  the  legal-tender  notes,  and  the  silver  dollars,  and 
the  gold  coin. 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  205 

A  NEW   UNITED   STATES  NOTE. 

Mr.  McCleary.  I  have  been  trying  to  picture  this  note  that  you 
have  been  describing'.  Am  1  to  understand  that  it  is  a  United  States 
note  on  one  side  and  a  bank  note  on  the  other  ? 

Mr.  Walker.  Yes;  it  is  the  legal-tender  note  except  to  the  bank 
that  has  its  note  printed  on  the  back,  and  to  that  bank  it  is  purely  a 
currency  note,  like  the  rest  of  the  notes  it  issues  against  its  assets. 

Is  it  not  a  fact  that  neither  the  Government  Treasury  here  nor  any 
subtreasury  can  currently  redeem  paper  with  the  current  funds  ;i  I 
banks  can  do  it?  The  Government  can  not  do  it  without  the  actual 
presence  of  the  legal  redeemer?  I  address  my  remark  to  cither  Secre- 
tary Fairchild  or  Secretary  Gage,  or  to  both. 

Mr.  Fairchild.  Will  you  repeat  that? 

TREASURY  REDEMPTION  EXCHANGE. 

Mr.  Walker.  Can  the  United  States  Treasury  or  any  of  its  sub- 
treasuries  currently  redeem  paper  money  as  freely,  immediately,  and 
economically  as  the  banks  can  redeem  the  paper  money  themselves? 

Mr.  Fairchild.  Do  you  mean  can  the  Treasury  redeem  bank  notes 
as  economically? 

Mr.  Walker.  Paper  money  of  any  kind — paper  money  that  they 
issue — as  easily  as  the  banks  can  redeem  money  they  issue. 

Mr.  Fairchild.  That  I  can  not  say.  That  is  a  matter  of  statistics. 
I  could  not  say  as  to  the  cost. 

TREASURY  REDEMPTION  TO   COST  $27,000,000  A  YEAR. 

Mr.  Walker.  For  the  cost  of  keeping  the  redemption  of  moneys — 
the  whole  system — the  United  States  Government  has  held  between 
$200,000,000  and  6300,000,000  of  money  for  twenty  years.  It  is  a  cost 
to  the  people  who  are  taxed  to  keep  it  of  G  per  cent  interest  on  that 
sum  of  money.  Now,  it  is  proposed  in  both  your  bill  and  in  Secre- 
tary Gage's  bill  to  add  $200,000,000  more,  bringing  the  money  in  the 
United  States  Treasury  up  to  $450,000,000,  and  the  interest  on  that 
costs  the  people  6  per  cent.  That  makes  $27,000,000  a  year  for  the 
privilege  of  the  United  States  Treasury  redeeming  this  paper  money — 
that  is,  we  have  got  to  keep  that  amount  on  hand.  Not  only  that,  but 
the  machinery  of  redemption,  in  the  sense  of  products  meeting  products 
in  the  general  funds  of  a  bank,  and  their  paper  representatives,  includ- 
ing currency  notes,  with  its  other  obligations  redeeming  each  other,  not 
Treasury  redemption,  is  not  as  convenient  as  it  would  be  in  a  banking 
system  outside  the  Treasury.     Is  not  that  a  fact? 

Mr.  Fairchild.  That  is  a  fact. 

.Mr.  Johnson.  Do  you  eliminate  the  United  States  Treasury  in  your 
scheme? 

Mr.  Walker.  Certainly.  It  is  nothing  to  the  public  whether  the 
Treasury  receipts  are  more  or  less  under  my  bill. 

My  bill  absolutely  relieves  the  United  States  Treasury  from  having 
anything  to  do  with  the  current  redemption  of  any  money  of  any  kind, 
and  puts  it  on  the  banks,  and  on  the  theory  that  the  banks  can  do  it 
at  no  cost,  that  gold  freely  Hows  into  the  banks,  and  Hows  out  of  them 
where  they  issue  true  currency  notes — paper  money.  That  absolutely 
relieves  the  Treasury.     My  claim  is  that  my  system  would  relieve  the 


206       STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 

United  States  Treasury  of  keeping  $400,000,000,  more  or  less,  that  your 
bills  require  to  be  kept  in  the  Treasury. 

Mr.  Fairchild.  What  is  the  $400,000,000? 

Mr.  Walker.  There  is  $280,000,000  now  in  the  United  States  Treas- 
ury, more  or  less— some  $240,000,000  to  $288,000,000;  $28S,000,000  it 
has  averaged  in  some  years. 

Mr.  Xewlands.  Of  what? 

Mr.  Walker.  I  mean  of  "  free  moneys,"  as  reported.  Call  it  Govern- 
ment working  note  redemption  capital  if  you  choose.  England  has  a- 
working  capital  of  about  $20,000,00;);  France  a  working  capital  of  about 
$30,000,000,  and  Germany  a  working  capital  of  about  $20,000,000,  and 
we  have  $280,000,000. 

PROPOSITION  TO  HAVE   $350,000,000  IN  THE  TREASURY. 

Now,  Mr.  Gage  proposes  to  take  out  $125,000,000  of  this  $28S,000,000; 
he  proposes  to  add  $200,000,000,  making  $325,000,000,  which  is  equiva- 
lent to  adding  $200,000,000  to  what  we  now  have;  while  my  bill  relieves 
the  Government  of  the  necessity  of  keeping  any  money  whatever  except 
an  ordinary  exchequer  balance,  the  same  as  any  man  keeps  his  business 
cash. 

Mr.  Fairchild.  Then  somebody  else  is  to  take  care  of  those  things. 

Mr.  Walker.  It  costs  the  Government  interest  on  it  and  would  not 
cost  the  banks  anything. 

Mr.  Fairchild.  They  do  not  make  interest  on  the  money  in  their 
vaults. 

Mr.  Walker.  That  is  true,  but  they  would  not  have  to  keep  any 
additional  sum  there  under  my  bill. 

Mr.  Fairchild.  They  would  take  care  of  the  notes,  and  the  banks 
would  not  have  to  do  any  more  than  now.     Is  that  it? 

BANKS     NOW     SUSTAIN     THE     TREASURY,   COSTING   THE    PEOPLE 

$50,000,000  A  YEAR. 

Mr.  Walker.  The  banks  to-day  sustain  the  Treasury  and  are  at  the 
expense  of  sustaining  the  $1,000,000,000  that  are  in  circulation.  That 
is  my  assumption.  Now,  if  the  $1,000,000,000  that  is  in  circulation 
pays  only  1  per  cent,  the  people  are  in  fact  paying  the  difference  between 
1  and  0  per  cent  on  the  whole  $1,000,000,000  the  way  it  is  now  issued — 
tli  at  is,  $50,000,000  a  year  in  higher  rates  of  interest.  I  ask  you  if  that 
is  not  a  fact? 

Mr.  Fairchild.  I  do  not  get  at  that. 

Mr.  Walker.  Suppose  there  was  no  paper  money  in  existence  except 
that  issued  by  the  banks,  and  suppose  the  demands  of  the  people  call 
for  $1,000,000,000  of  paper  money,  as  now,  and  the  banks  issued  it  and 
kept  that  amount  in  circulation.  We  will  put  it  in  round  numbers. 
The  banks  would  make  on  that  what  their  rates  of  loans  and  discounts 
were  on  their  general  business. 

Mr.  Fairchild.  Yes. 

UNITED  STATES  TREASURY  TO  PAY  THE   CURRENCY  IN  CASE  OF 
INSOLVENCY  UNDER   THE   WALKER  BILL. 

Mr.  Walker.  If  they  are  not  making  any  money  on  that,  then  the 
banks  are  losing  that  much  that  they  otherwise  would  make  under  the 
English  or  Scotch  or  French  or  German  or  Suffolk  or  State  bank  system, 
or  under  the  Walker  bill.    Is  not  that  true  ? 


STRENGTHENING   TIIE    PUBLIC    CREDIT,  ETC.  207 

Mr.  FAiRcniLD.  Of  course;  that  is  a  mathematical  statement;  that 
if  they  do  not  loan  the  money  then  they  are  not  making  the  interest 

on  it. 

Mr.  Fowler.  Ultimate  redemption,  however,  is  thrown  upon  the 
Government. 

Mr.  Walker.  Yes,  when  a  bank  becomes  insolvent,  $200,000,000  of 
it;  but  there  is  a  tax  that  more  than  covers  it. 

Mr.  Fowler.  But  there  is  no  limit  to  the  tax? 

Mr.  Walker.  Yes. 

Mr.  Fowler.  The  Government  is  responsible  absolutely? 

Mr.  WALKEB.  Certainly;  but  there  i.<  a  tax  that  will  pay  for  that. 

Mr.  FOWLER.  But  if  that  tax  doesn't  happen  to  cover  it  the  Govern- 
ment must  take  it  up? 

Mr.  Walker.  Certainly;  the  Government  guarantees  in  a  statute 
the  same  as  now,  with  a  bond. 

Mr.  Fowler.  It  is  an  absolute  guarantee  for  all  the  banks  may 
issue. 

Mr.  Walker.  Yes.  The  money  is  just  as  safe  as  the  bonds,  except 
it  is  written  in  the  statute  instead  of  being  written  in  the  bonds. 

Mr.  Hill.  There  is  a  5  per  cent  held  by  the  Government  of  its  own 
money  against  its  own  notes. 

Mr.  Walker.  Yes;  it  would  amount  to  $10,000,000,  and  the  bank 
also  keeps  with  the  Government  an  amount  equal  to  5  per  cent  of  its 
currency,  which  it  can  not  count  in  its  reserve. 

Mr.  Johnson.  Are  jtou  talking  about  your  bill? 

Mr.  Walker.  I  am  talking  about  my  bill. 

TRUE  VISIBLE   GOLD. 

Mr.  Walker.  Now  I  want  to  call  your  attention  to  another  remark- 
able thing.  In  the  whole  of  the  United  States  there  was  specie  in  the 
old  State  banks,  in  18G0,  of  $2.09  per  capita.  To-day  there  is  gold  in 
the  national  banks  to  exactly  the  same  amount — 82.00  per  capita. 

Mr.  Fairchild.  Does  that  include  all  the  old  State  banks? 

Mr.  Walker.  All ;  yes,  sir. 

Mr.  Fairchild.  Then  the  gold  in  the  national  banks  is  equivalent 
to  the  gold  in  the  State  banks? 

Mr.  Walker.  It  is  fair  to  say  that  the  gold  in  banks  in  1860  per  capita 
was  $2.60  in  this  country.  To-day  it  is  the  same  per  capita  in  the  national 
banks  alone.  The  amount  in  the  State  banks  is  not  given  to-day,  but 
they  hold  of  cash  44.7  per  cent  as  much  as  the  national  banks.  It  is 
reasonable  to  suppose  that  there  is  $1.20  per  capita  of  gold  in  State 
banks,  which,  added  to  the  other,  makes  a  specie,  probably  gold,  to-day, 
per  capita.  $3.89,  to  $2.69  in  I860.  Now,  $3.06  in  gold  to  each  of  the 
73,000,000  amounts  to  $272,300,000  in  gold.  The  visible  gold,  as  shown 
in  the  Comptroller's  report,  December  7, 1806,  page  22,  was  $  121,236,388. 
Visible  gold  not  in  banks  of  loan  and  discount  then  was  $]  18,936,388. 
Total  gold  in  the  United  States  is  $696,270,542,  by  t  he  report  of  the  mint. 

I  did  not  suppose  it  was  anywhere  near  that  amount,  but  my  recent 
investigation,  and  the  fact  that  gold  is  paid  in  for  taxes  in  St.  Louis 
and  other  cities  by  comparatively  poor  people,  leads  me  to  think  that 
there  is  more  than  that.  I  should  not  be  surprised  if  $800,000,000 devel- 
oped if  we  had  a  proper  banking  system  that  fully  restored  confidence. 
The  visible  gold  per  capita — not  the  gold  in  pockets,  but  the  visible  gold 
in  the  various  institutions — is  $.5.77,  and  the  total  gold  in  the  country 
is  $9.54  per  capita  that  we  know  of,  not  counting  thai  which  is  hoarded. 
I  take  the  statistics  as  they  are  given. 


208        STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 

Mr.  Newlands.  Will  you  please  state  again  what  the  per  capita  of 
visible  gold  is? 

Mr.  Walker.  Five  dollars  and  seventy-seven  cents.  That  was  found 
by  the  investigation  of  Mr.  Eckles,  and  was  stated  in  his  report  of  Decem- 
ber, 1896,  page  26.  My  point  is,  that  if  we  had  a  banking  system  that 
would  establish  confidence,  such  as  is  felt  in  Germany,  France,  Canada, 
and  Scotland,  would  not  a  large  amount  of  gold  that  is  not  now  visible 
be  visible  by  flowing  into  banks  at  once,  or  at  least  very  soon? 

Mr.  Fairchild.  1  think  so.  1  think  if  there  was  entire  confidence  in 
our  monetary  condition  that  we  would  see  a  great  deal  more  gold. 

SUFFOLK  SYSTEM. 

Mr.  Walker.  The  New  England  banking  system — the  Suffolk  sys- 
tem— was  understood  to  be  about  as  safe  a  system  as  any  country  has 
ever  had  in  its  practical  workings;  so  much  so,  that  in  1857  scarcely  a 
bank  failed,  and  when  they  suspended  specie  payment  (and  then 
because  New  York  had  suspended  and  they  were  forced  to  do  it  for 
that  reason)  they  paid,  during  the  whole  of  that  suspension  to  anybody 
that  asked  for  it  in  the  legitimate  way  of  business,  all  the  specie  they 
wanted;  and  gold  did  not  go  to  a  premium  by  the  smallest  fraction 
during  that  nominal  suspension. 

Mr.  McCleary.  When  was  that? 

Mr.  Walker.  In  the  panic  of  1857.  The  statements  that  I  have 
made  are  matters  of  history. 

Mr.  McCleary.  I  do  not  doubt  your  statement,  but  was  simply 
asking  for  information. 

Mr.  Walker.  Now,  at  that  specie  security  we  could  issue  to-day 
$1,454,075,000  of  currency,  with  13£  per  cent  gold  back  of  it,  as  New 
England  banks  then  had. 

Mr.  McCleary.  And  have  as  good  security? 

SUFFOLK  SYSTEM  NATIONALIZED   IN  WALKER  BILL. 

Mr.  Walker.  Yes.  And  have  the  same  amount  of  gold  in  the 
banks  back  of  the  currency  now,  as  through  the  New  England  system 
for  forty  years — the  Suffolk  system.  The  Walker  bill  is  the  Suffolk 
system  nationalized.  It  is  absolutely  and  purely  that,  and  nothing 
else;  that  is  to  say,  essentially  the  same  as  the  Scotch  and  the  Cana- 
dian and  the  German  and  the  French  systems  now.  Issuing  $800,000,000 
of  currency  there  would  be  visible  gold  in  the  banks  within  a  small 
fraction  of  24£  per  cent,  about  double  of  what  there  was  in  the  New 
England  banks  under  the  Suffolk  system.  The  visible  gold  that  would 
flow  into  the  bank  immediately  would  be  52  per  cent,  more  than  half, 
which  is  an  unheard  of  percentage  of  gold  to  currency  issued. 

In  view  of  these  facts,  have  you  any  doubt  about  the  safety  in  the 
specie  reserve  to  maintain  the  $800,000,000  currency  that  it  is  contem- 
plated would  be  issued  in  the  near  future  ? 

Mr.  Fairchild.  I  have  no  trouble  on  the  specie  question.  I  think 
there  will  be  ample  for  that. 

IMMENSE  AMOUNT   OF  GOLD. 

Mr.  Walker.  In  view  of  this  immense  amount  of  gold  that  we  now 
have  in  banks  and  the  additions  that  would  find  their  way  into  the  banks, 
namely,  52  per  cent  now  of  gold  to  $800,000,000  of  currency,  if  that  is 
issued,  is  not  the  retaining  of  $200,000,000  of  legal- tender  notes  that  the 


STRENGTHENING    THE    PUBLIC    CREDIT,   ETC.  209 

banks  can  keep  in  reserve  a  good  and  not  an  evil  in  furnishing  a  redemp- 
tion agent  and  a  reserve?  That  is  what  I  am  getting  at.  I  have  intro- 
duced these  facts,  not  with  reference  to  the  gold  question,  but  to  discuss 
this  question:  If  the  Government  is  relieved  from  current  redemption, 
and  it  is  put  on  the  banks,  and  the  banks  have  this  immense  amount  of 
gold,  is  not  the  assumption  of  "current  redemption"  by  the  banks 
entirely  safe? 

Assuming  what  1  have  stated  is  correct,  is  it  not  a  good  and  not  an 
evil  to  continue  $200,000,000  of  legal-tender  notes  so  that  they  can  be 
used  as  available  funds  by  banks  to  supply  and  transfer  balances 
rather  than  to  be  at  the  expense  of  transporting  gold? 

Mr.  Fairciiild.  It  would  not  be  necessary  to  transport  the  gold  any 
more  than  we  do  at  New  York  at  the  present  time.  There  they  have  to 
put  the  gold  in  charge  of  the  clearing  house,  and  they  have  simply  a 
piece  of  paper  to  represent  it.     It  is  a  mere  matter  of  ingenuity. 

Mr.  Walker.  In  the  absence  of  this  $200,000,000  of  legal  tender 
they  would  have  to  accumulate  this  $000,000,000  of  gold? 

Mr.  Fairchild.  Yes. 

Mr.  Walker.  Now,  if  that  is  so,  would  it  not  be  a  good  to  the  country 
not  to  require  them  to  accumulate  the  $600,000,000,  but  be  satisfied 
with  $400,000,000,  and  let  them  hold  $200,000,000  of  greenbacks  in  the 
place  of  $200,000,000  gold? 

Mr.  Fairchild.  Who  is  behind  the  $200,000,000  in  greenbacks? 

Mr.  Walker.  The  banks.  They  have  to  redeem  them  the  same  as 
their  own  currency. 

Mr.  Fairchild.  Where  do  they  get  the  gold  for  that? 

Mr.  Walker.  The  same  as  to  redeem  any  other  currency  notes  of  the 
banks— out  of  the  $021,000,000  of  gold. 

Mr.  Cox.  Where  do  they  get  the  $421,000,000? 

Mr.  Walker.  It  is  "visible"  in  the  country  now. 

TOO  MUCH   GOLD   REQUIRED. 

Mr.  Walker.  As  I  understand  it,  Mr.  Fairchild,  the  bill  of  the  com- 
mission would  destroy  all  the  Treasury  notes  and  legal-tender  notes;  it 
would  so  use  the  silver  dollars  that  they  could  not  be  had  to  use  in  the 
cash  reserves  of  banks;  and  this  for  the  purpose  of  making  it  impracti- 
cable for  banks  to  get  any  other  money  but  gold  to  redeem  their  notes 
with.     That  would  be  the  effect  of  it  ? 

Mr.  Fairchild.  That  would  be  the  effect  of  it. 

Mr.  Walker.  How  much  gold  would  it  take  to  furnish  all  cash 
reserves  now  held  by  national  banks? 

Mr.  Fairchild.  I  have  not  figured  on  that. 

Mr.  Walker.  The  report  of  the  Comptroller  of  the  Currency  says 
that  $389,000,000  in  round  numbers  in  cash  reserve  is  held  in  the 
national  banks,  and  that  in  the  State  banks  there  is  $152,000,000  cash 
reserve,  and  he  estimates  then'  is  about  12.^  per  cent  of  the  State  banks 
that  do  not  report  to  the  Comptroller.  That  would  make  the  probable 
cash  reserve  now  in  the  banks  $562,883,000.  The  question  is  whether 
that  amount  in  gold  would  not  overload  the  banks,  whether  it  is  not  an 
unreasonable  expectation,  and  even  if  the  expectation  could  be  realized 
whether  it  would  not  be  an  exceedingly  uneconomical  procedure  to 
compel  the  banks  to  keep  $502,000,000  of  gold,  upon  which  the  country 
must  lose  interest.  That  is  to  say,  "  a  sufficiency  is  enough."  The 
moment  they  get  gold  to  more  than  what  makes  absolute  safety  the 
people  are  losing  6  per  cent  interest  on  the  unnecessary  surplus. 
B  &  c 14 


210  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

Mr.  Fairchild.  Certainly. 

Mr.  "Walker.  We  want  enough,  and  have  both  gone  on  the  idea 
that  a  sufficiency  is  enough;  but  is  not  what  is  provided  for  in  the  com- 
mission bill  an  unreasonable  amount? 

Mr.  Fairchild.  Possibly  it  is.    I  do  not  think  it  is  an  unwise  amount. 

"TRUE   BANK   CURRENCY"  BETTER   THAN   "BOND   SECURED   CUR- 
RENCY "—GAGE  BILL   "TENTATIVE." 

The  Chairman.  Mr.  Secretary,  you  say  your  bill  (H.  R.  5181),  which 
you  have  drawn  and  presented  to  the  committee,  "  is  not  final,  but  rather 
a  tentative  step;"  and  again  you  say,  "it  will  lead  to  conditions  ulti- 
mately desirable."  In  order  to  know  the  virtue  and  value  of  the  bill 
and  the  desirability  of  entering  upon  its  enactment,  it  is  necessary  for 
the  committee  to  know  what  you  have  in  view  and  what  you  would  call 
the  completed  whole. 

Secretary  Gage.  It  would  be  a  condition  of  affairs  where  there  was 
a  system  of  bank  notes  issued  in  the  United  States  made  safe  to  the 
people  without  the  deposit  in  the  hands  of  a  trustee  of  specific  security 
therefor,  wisely  limited  and  restricted  by  law  so  as  to  reduce  to  the 
minimum  the  possible  abuses  which  might  grow  out  of  such  a  respon- 
sible duty,  and  eliminating  substantially  or  entirely  the  Government  of 
the  United  States  from  its  present  method  of  paying  its  debts  by  giving 
another  debt  in  payment. 

The  Chairman.  That  completes  the  answer? 

Secretary  Gage.  I  think  it  does. 

The  Chairman.  Mr.  Gage,  in  reply  to  the  question  as  to  what  your 
scheme  was  tentative  to,  and  to  what  you  looked  as  final,  you  made  a 
statement  which  is  in  the  record.  Upon  reading  your  answer  to  the 
question,  are  you  satisfied  with  it  ?     [See  above.] 

Secretary  Gage.  Yes,  sir;  it  might  be  somewhat  extended,  but  I 
think  the  idea  is  covered  in  that. 

The  Chairman.  Mr.  Fairchild,  you  listened  to  the  statement  of  Mr. 
Gage.    Do  you  agree  with  his  idea? 

Mr.  Fairchild.  Yes. 

TRUE  BANK  CURRENCY. 

The  Chairman.  I  desire  to  ask  a  question  or  two  as  to  a  "true  bank 
currency"  for  the  purpose  of  getting  it  in  the  record,  so  the  people 
reading  the  record  will  know  what  we  are  talking  about.  A  bank 
keeps  at  all  times,  in  the  regular  conduct  of  its  business,  assets  more 
than  equal  to  every  obligation  against  it,  including  its  currency  notes? 

Secretary  Gage.  Yes,  sir. 

The  Chairman.  Secondly,  a  bank  pays  out  every  dollar  it  puts  in 
circulation  upon  the  receipt  from  the  person  taking  it  of  ample  security 
for  its  redemption  ? 

Secretary  Gage.  That  is,  in  good  practice  and  theory. 

The  Chairman.  Thirdly,  the  currency  of  a  bank  is  redeemed  at  its 
place  of  redemption  by  its  general  "current  funds" — which  are  titles 
to  products,  and  which  are  in  the  hands  of  another  bank  that  acts  as 
its  agent  in  redeeming  its  notes,  and  not  in  actual  coin? 

Secretary  Gage.  What  do  you  mean  by  "current  funds?" 

The  Chairman.  I  will  put  it  differently.  In  the  current  funds  that 
it  has  on  deposit  in  its  correspondent  bank  for  the  purpose  of  meeting 
all  its  obligations,  including  its  currency  notes? 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  2 1  1 

Secretary  Gage.  Yes,  sir;  that  is  true. 

The  Chairman.  On  the  other  hand,  a  (l)  government  gets  nothing 
in  the  regular  course  of  its  business  when  it  pays  out  its  own  currency, 

and  (2)  the  coin  must  be  constantly  carted  into  the  vaults  to  redeem, 
and  carted  ou*i  in  redemption  of  paper  money. 

Secretary  Gage.  The  first  part  of  the  statement  is  correct,  that  when 
the  Government  pays  out  it  does  not  acquire  anything  which  it  keeps 
to  serve  as  an  ultimate  redemption  for  the  note  it  pays  out.  The  note 
it  pays  out  is  in  consideration  for  services  already  rendered  or  for  goods 
and  commodities  already  received  and  used. 

The  Chairman.  If  you  will  turn  to  page  175  of  the  Treasurer's  report 
for  1897  you  will  iind  that  there  was  redeemed  at  the  Treasury  last 
year  $113,000,000,  total  redemption  of  national  bank  notes.  In  the 
second  column  of  the  table  you  will  see  there  was  $33,000,000  of  money 
that  was  actually  sent  out  by  express — that  is  to  say,  about  one-third. 
The  rest  of  the  redemption  was  in  checks  on  the  subtreasuries  sent  to 
banks,  as  I  understand  I 

Secretary  Gage.  Yes,  sir. 

The  Chairman.  Now,  it  is  equipped  with  funds,  either  greenbacks  or 
coin ;  if  it  was  coin  redemption,  that  coin  had  to  be  carted  into  the  sub- 
treasury  from  some  source  in  order  to  meet  the  balance  of  $80,000,000 
redemption1! 

Secretary  Gage.  That  would  be  supplied  in  some  manner. 

The  Chairman.  Then  the  answer  to  my  question,  of  course,  is  in  the 
affirmative — that  is,  essentially  true. 

Secretary  Gage.  That  is  substantially  correct. 

The  Chairman.  The  currency  issued  by  a  government  redeeming 
government  currency  can  not  be  redeemed  in  general  current  funds — 
which  are,  of  course,  the  titles  to  products — for  it  has  none  and  can  get 
none.  The  bank  must  send  its  specie  to  redeem  its  notes  with,  or  the 
government  must  get  specie  by  taxation  or  selling  bonds — one  or  the 
other  method ! 

Secretary  Gage.  I  see  no  other  avenues. 

The  Chairman.  I  want  to  call  your  attention  to  the  taxes  proposed 
in  the  bill  prepared  by  Secretary  Gage  and  Ex-Secretary  Fairchild. 

Mr.  Brosius.  I  would  like  to  ask  if  you  mean  that  these  propositions 
embody  the  theory  of  banking? 

The  Chairman.  And  the  practice. 

Mr.  Brosius.  Do  you  mean  to  say  these  propositions  express  the 
actual  practice  of  banks  always? 

The  Chairman.  I  do. 

Mr.  Brosius.  I  can  not  give  my  unqualified  assent  now,  and  at  some 
time  I  would  like  some  explanation  of  these  propositions. 

The  Chairman.  Now  is  the  time  to  record  it. 

BANK  ASSETS. 

Mr.  Brosius.  You  say  a  bank  keeps  at  all  times,  in  the  regular  con- 
duct of  its  business,  assets  more  than  equal  to  every  obligation  against 
it,  including  currency  notes.  If  that  is  so,  no  bank  could  ever  break 
up,  and  banks  are  breaking  up. 

The  Chairman.  1  do  not  mean  insolvent  banks;  I  mean  sound  banks. 

Mr.  Brosius.  That  is  an  exception  to  the  proposition. 

The  Chairman.  It  is  implied  in  the  questions. 

Mr.  Brosius.  In  the  second  place,  you  saj  the  bank  pays  out  every 
dollar  it  puts  in  circulation  upon  the  receipt,  from  the  person  taking  it, 


212  STRENGTHENING    THE    PUBLIC    CREDIT,   ETC. 

of  ample  security  for  its  redemption.  If  that  is  true  there  would  be  no 
bad  debts.  If  all  the  money  paid  out  is  secured  by  ample  securities, 
when  are  notes  discounted  by  a  bank  not  good  at  all? 

The  Chairman.  I  am  speaking  of  a  sound  bank. 

Mr.  BROSIUS.  Then,  if  it  is  the  theory  of  banking,  it  is  all  right. 

The  Chairman.  No;  it  is  not  the  theory  only;  it  is  the  actual 
practice. 

Mr.  Brosius.  In  the  average  of  banks? 

SECURITIES   TAKEN  FOR  BANK  CURRENCY. 

The  Jhairman.  No;  I  mean  to  say  that  where  a  bank  pays  out  its 
currency  notes  it  always  takes  from  the  man  who  receives  the  currency 
what  it  considers  to  be  sound  securities — it  may  be  mistaken,  but  what 
it  considers  are  at  the  time  sound  securities — for  more  than  it  pays  out 
in  currency  notes. 

Mr.  Brosius.  That  is  right,  but  that  is  a  totally  different  proposi- 
tion. 

TRUE  BANK  CURRENCY  REDEEMED  BY  THE  MAN  WHO  TAKES  IT. 

The  Chairman.  No,  sir;  the  second  proposition  is  that  the  man  who 
borrows,  as  a  matter  of  fact,  in  good  banking,  himself  redeems  the  notes 
that  he  takes  from  the  bank.  That  would  come  in  a  little  later,  but  I 
put  it  in  now:  Namely,  the  banks  take  the  personal  time  note  of  the 
borrower  on  ninety  days,  and  if  its  currency  is  averaged  to  be  redeemed 
once  in  every  ninety-two  days,  four  times  a  year,  the  man  who  took  the 
currency  for  the  proceeds  of  the  discounted  note  actually  deposits  the 
funds  in  the  bank  which  redeems  that  currency.  That  is  not  theoreti- 
cal, but  practical,  banking.  These  propositions  are  absolutely  true,  and 
can  be  found  in  the  active  banking  of  France,  Germany,  England,  Scot- 
land, Canada,  and  every  other  country  that  has  a  sound  and  true  bank- 
ing currency;  and  you  can  not  have  sound  banking  where  the  public 
Treasury  is  the  redeemer. 

NORMAL   CIRULATION. 

Mr.  Newlands.  Mr.  Secretary,  Mr.  Fowler,  in  one  of  his  questions, 
used  the  term  "normal  circulation."    What  do  you  understand  by  that? 

Secretary  Gage.  I  do  not  understand  anything  by  it.  I  do  not  know 
what  is  normal,  and  I  do  not  believe  anybody  does  or  can  tell;  the  law 
of  supply  and  demand  operates,  and  that  determines  what  is  normal. 

The  Chairman.  And  whatever  that  shows  is  taken  out  is  normal? 

Secretary  Gage.  I  think  so. 

Mr.  Fowler.  Then  it  does  mean  something? 

The  Chairman.  It  means  that  whatever  circulation  averages  to  be 
taken  out  is  thus  shown  to  be  normal. 

Secretary  Gage.  With  that  correction  of  my  expression  as  to  what 
the  word  meant,  I  should  say  yes. 

ELASTICITY  OF  CURRENCY. 

Mr.  Newlands.  It  is  expected  that  the  circulation  that  these  bills 
call  for  will  have  the  element  of  elasticity? 

Secretary  Gage.  It  is  expected  it  will. 

Mr.  Newlands.  As  a  matter  of  fact,  is  not  this  bank  circulation 
practically  an  extension  of  the  check  and  deposit  system? 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  213 

Secretary  Gage.  That  is  what  it  is. 

Mr.  ]Stewlands.   A  practical  extension  of  the  check  and  deposit 

system? 

bank  currency  checks. 

Secretary  Gage.  Substantially;  a  bank  note  issued  by  a  banker  is 
nothing  more  than  a  memorandum  check  which  will  draw  money  from 
the  bank  at  any  time  at  the  pleasure  of  the  holder. 

Mr.  Kewlands.  It  is  a  check  payable  to  bearer? 

Secretary  Gage.  Yes,  sir;  it  is,  substantially. 

Mr.  Johnson.  Do  I  understand  you  to  say  that  an  elastic  currency, 
one  which  would  expand  and  contract  with  the  varying  needs  of  trade, 
is  as  readily  obtained  on  bond  security  as  under  some  other  form  of 
security — as  under  security  issued  against  the  assets  of  the  bank  with 
a  guaranty  fund? 

Secretary  Gage.  I  do  not  say  that  the  secured  circulation  is  as  useful 
as  the  unsecured;  that  is  another  side  of  the  question.  1  do  not  think 
it  is  useful  to  tie  up  capital  needlessly. 

Mr.  Johnson.  That  is  the  point  I  wished  to  develop. 

WALKER  BILL. 

The  Chairman.  I  want  to  say  to  Mr.  Fairchild  and  Secretary  Gage 
that  the  bill  prepared  by  myself  meets  exactly  the  conditions  that  you 
have  suggested  ought  to  be  met  in  the  banks  you  have  designated  in  a 
proper  banking  system  whenever  you  can  get  it. 

Suppose  there  was  no  paper  money  in  existence  except  that  issued 
by  the  banks,  and  suppose  the  demands  of  the  people  call  for  $1,000,- 
000,000  of  paper  money,  as  now,  and  the  banks  issued  it  and  kept  that 
amount  in  circulation.  We  will  put  it  in  round  numbers.  The  banks 
would  make  on  that  what  their  rates  of  loans  and  discounts  were  on 
their  general  business. 

Mr.  Fairchild.  Yes. 

BOND-SECURED   CURRENCY  ROBS  A   BANK   OF   CAPITAL. 

Mr.  Walker.  If  they  are  not  making  any  money  on  that,  then  the 
banks  are  losing  that  much  that  they  otherwise  would  make  under  the 
English  or  Scotch  or  French  or  German  or  Suffolk  or  State  bank  system, 
or  under  the  Walker  bill.     Is  not  that  true? 

Mr.  Fairchild.  Of  course;  that  is  a  mathematical  statement;  that 
it'  they  do  not  loan  the  money  then  they  are  not  making  the  interest  on  it. 

SECURE   ON   GOLD  STANDARD. 

Mr.  Walker.  Mr.  Gage,  do  you  understand  that  France  is  abso- 
lutely secure  on  the  gold  standard? 

Secretary  Gage.  Yes;  I  think  so. 

Mr.  Walker.  Do  you  not  think  Germany  is  absolutely  secure  on  the 
gold  standard? 

Secretary  Gage.  I  believe  so;  but  it  does  not  make  so  much  differ- 
ence to  me  what  Germany  or  France  are  on  as  it  does  what  we  are  on, 
because  our  coutracts  are  domestic  and  relate  to  all  the  trade  aud 
commerce  which  we  get. 

Mr.  Walker.  I  make  the  statement  that  the  bill  drawn  by  me  puts 
us  on  precisely  the  same  standard,  in  precisely  the  same  manner,  with 


214  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

a  little  different  machinery,  as  France  or  Germany,  and  if  that  is  the 
fact,  and  that  bill  could  be  passed  and  this  Monetary  Commission  bill 
could  not,  and  mine  accomplishes  what  you  declare  ought  to  be 
accomplished 

Secretary  Gage  (interrupting).  Then  it  would  be  perfectly  satisfac- 
tory to  me  in  that  particular. 

The  Chairman.  When  a  bank  issues  currency  it  has  the  right  to 
take  out  against  its  assets  to  the  limit  of  its  capital.  It  secures  currency 
to  the  amount  of  its  capital,  puts  it  in  its  vaults,  and  keeps  out  what 
it  well  can,  having  currency  always  in  its  vaults  to  put  out  whenever 
there  is  a  call  for  it  and  they  can  get  it  out.  It  has,  in  addition  to  that, 
the  capital,  which  is  not  depleted  by  a  dollar  in  loaning  currency. 

Secretary  Gage.  That  is  right. 

CURRENCY  ISSUED   AGAINST   ASSETS. 

The  Chairman.  If  they  have  to  put  up  bonds  they  can  buy  at  par 
and  issue  currency  to  the  amount  of  the  capital;  it  absorbs  every 
dollar  of  their  capital. 

Secretary  Gage.  That  is  right. 

BANK   CURRENCY  REDUCES  INTEREST   RATES. 

The  Chairman.  Then,  if  a  bank  can  make  loans  of  its  deposits  to  an 
amount  sufficient  to  make  money  enough  to  pay  its  expenses  of  every 
name  and  nature  and  they  just  balance  (assuming  that  they  can  keep 
out  all  their  currency) — then  they  can  make  loans  at  one-half  the  rate 
of  interest  they  could  if  the  capital  was  used  up  to  take  out  currency 
secured  by  bonds. 

Secretary  Gage.  That  is  substantially  true. 

The  Chairman.  Now,  every  dollar  of  currency,  where  the  currency 
is  issued  against  assets  that  remain  in  the  vault  of  a  bank,  remains 
there  without  the  slightest  loss  to  the  bank,  except  the  printing  of  it. 

Secretary  Gage.  That  is  true. 

*  *  *  Suppose  that  with  a  bank  the  same  circular  movement  of 
gold  goes  on  that  was  spoken  of  a  little  while  ago.  The  probability  is 
that  every  bank  in  every  money  center  redeems  every  day  from  10  to  15 
per  cent  of  its  liabilities,  creating  new  liabilities  to  someone  else,  and 
the  next  day  liquidating  again  and  again,  always  new  creditors  settling 
and  satisfying  former  creditors.  There  is  a  substantial  redemption  of 
a  bank's  liabilities.  A  bank's  notes  are  not  different  in  their  essential 
character  from  the  bank's  deposits.  They  are  the  same  in  their  nature 
and  are  governed  by  the  same  general  principles. 

BANK  CURRENCY,  THE  FARMERS  AND  WAGE  EARNERS'  "CERTIFICATE 

OF  DEPOSIT"  AND  BANK  CHECK. 

Mr.  Walker.  Is  it  not  the  practice  of  merchants  and  manufacturers 
and  those  living  in  cities  to  leave  the  proceeds  of  a  personal  note  dis- 
counted for  them  by  a  bank  in  the  possession  of  a  bank  in  the  form  of 
an  "individual  deposit,"  to  be  drawn  out  by  checks,  drafts,  etc.? 

Mr.  Fairchild.  Yes. 

Mr.  Walker.  On  the  other  hand,  is  it  not  the  almost  universal  prac- 
tice of  the  people  who  live  in  sparsely  settled  sections  of  the  country, 
and  especially  the  farmers,  to  take  home  with  them  the  currency  notes 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  215 

of  the  bank  discounting  their  time  notes  rather  than  to  leave  the 
proceeds  in  the  bank  discounting  or  in  another  bunk? 
Mr.  Fairchild.  I  understand  that  to  be  the  case. 

BOND-SECURED   CURRENCY   OPPRESSIVE. 

Mr.  Walker.  Then  is  not  a  very  great  hardship  worked  to  those 
sections  of  the  country  under  a  bankiug  system  which  does  not  allow 
the  free  issue  of  paper  on  the  true  banking  principle? 

Mr.  Fairchild.  I  consider  it  so. 

Mr.  Walker.  Is  not  a  currency  note  to  the  person  holding  it  the 
equivalent  of  a  certificate  of  deposit  or  a  certified  check  in  the  bank? 

Mr.  Fairchild.  It  is,  except  that  it  is  more  available  for  him. 

Mr.  Walker.  Better  for  his  purpose? 

Mr.  Fairchild.  Yes. 

Wr.  Walker.  Then  it  follows,  does  it  not,  that  any  great  expense 
put  upon  banks  in  getting  currency  notes  to  issue  is  a  great  expense, 
hardship — in  fact,  oppression — to  those  citizens  who  do  not  use  checks, 
drafts,  etc.,  in  their  transactions,  and  who  are  practically  compelled  to 
use  currency  or  do  without  banking  accommodations? 

Mr.  Fairchild.  Yes,  sir. 

BOND-SECURED   CURRENCY   CHECKS  ENTERPRISE. 

The  Chairman.  It  follows,  then,  that  a  currency  made  expensive,  or 
one  that  lessens  the  amount  of  loanable  funds  the  bank  has  on  any 
given  amount  of  capital  and  deposits,  checks  enterprise  by  making 
production  difficult  and  expensive  to  those  people  who  naturally  and 
inevitably  are  shut  up  to  the  use  of  currency  in  getting  bank  accom- 
modations instead  of  using  checks,  drafts,  etc.? 

Mr.  Fairchild.  That  is  true. 

Mr.  Hill.  Do  you  mean  by  your  answer  to  imply  that  there  should 
be  unlimited  bank  issues? 

Mr.  Fairchild.  No. 

Mr.  Hill.  Does  not  the  question  asked  by  Mr.  Walker  involve  that? 

Mr.  Fairchild.  I  did  not  so  understand  it. 

Mr.  Hill.  Will  you  kindly  ask  Mr.  Walker  to  have  that  read  again, 
and  in  the  light  of  that  repeat  your  answer? 

Mr.  Walker  (reading  the  question  again).  That  does  not  involve 
quantity  at  all.     Do  you  wish  to  change  your  answer? 

Mr.  Fairchild.  No. 

CURRENCY  ISSUED  FREELY  LOWERS  RATE   OF  INTEREST. 

Mr.  Walker.  It  follows,  then,  that  by  issuing  true  bank  currency  a 
bank  can  make  its  loans  to  the  people  patronizing  it  at  as  much  lower 
rate  of  interest  than  it  could  if  it  had  only  its  capital  and  deposits  to 
lend,  and  no  currency,  as  the  currency  it  lias  in  circulation  bears  to  the 
whole  amount  of  its  loans  and  discounts,  and  pay  the  same  dividends 
on  its  capital  stock? 

Mr.  Fairchild.  I  should  say  that  by  the  amount  its  circulation 
increases  its  resources  it  is  enabled  proportionately  to  give  a  greater 
accommodation  to  its  customers,  and  necessarily  at  a  less  rate. 

Mr.  Walker.  Compelling  a  bank  to  buy  bonds  at  par  to  Becure  its 
currency  notes,  even  if  the  bank  secures  notes  to  the  par  of  such  bouds, 


216  STRENGTHENING    THE    PUBLIC    CREDIT,   ETC. 

depletes  its  loanable  funds,  as  compared  with  the  "true  bank  currency  " 
issued  against  its  assets,  by  every  dollar  it  pays  for  such  bonds,  does 
it  not  ? 

Mr.  Fairchild.  I  think  so. 

Mr.  Walker.  Then,  compelling  banks  to  use  "bond- secured"  cur- 
rency compels  the  people  borrowing  of  such  banks  to  pay  a  higher  rate 
of  interest  as  compared  with  banks  issuing  "true  banking  currency" 
against  their  assets — as  is  done  in  every  other  country — in  proportion  to 
the  amount  of  such  currency  the  bank  uses  in  comparison  to  its  whole 
loans  and  discounts  ? 

Mr.  Fairchild.  It  seems  to  me  that  is  very  much  the  same  as  the 
other  question.    I  would  repeat  my  answer  to  the  other  question. 

TRUE  BANK  CURRENCY  ISSUED   BY   COUNTRY  BANKS. 

Mr.  Walker.  Mr.  Fairchild,  the  statistics  collected  by  the  Treasury 
Department  show  that  in  Vermont  all  the  banks  combined  (not  a 
single  bank)  kept  in  circulation  an  average  of  103  per  cent  of  the  cur- 
rency to  its  capital.  You  will  find  the  statistics  on  page  441  of  the 
hearings  before  this  committee  in  1896.  Old  Virginia  kept  out  96  per 
cent;  North  Carolina  95  per  cent.  You  will  find  by  turning  to  page 
458  that  55£  per  cent  of  the  country  banks  in  Massachusetts — outside 
of  Boston,  which  had  the  least  currency — had  over  64  per  cent;  Ocean 
bank,  Newburyport,  91  per  cent  to  capital;  Powow  River,  Salisbury, 
110  per  cent;  Brighton,  112  per  cent;  city  of  Cambridge,  96  per  cent; 
Maiden,  87  per  cent.  This  indicates,  does  it  not,  that  the  poorer  sec- 
tions of  the  country,  the  agricultural  districts,  like  Vermont  and  North 
Carolina  and  Virginia,  can  keep  in  circulation  if  they  are  allowed  to  do 
so,  about  100  per  cent  of  currency  to  capital? 

Mr.  Fairchild.  It  shows  that  they  did. 

The  Chairman.  Is  it  not  a  fact  that  the  average  of  the  banks  in  the 
country  can  keep  in  circulation  nearly  double  the  currency  at  certain 
seasons  of  the  year  over  what  they  can  at  other  seasons? 

Mr.  Fairchild.  I  do  not  know  the  exact  proportions. 

Mr.  Walker.  But  usually  much  more? 

Mr.  Fairchild.  It  is  usually  much  more. 

BORROWERS  GET  THE  ADVANTAGE  OF  "FREE  CURRENCY  ISSUE." 

Mr.  Walker.  Where  the  business  of  banking  pays  a  larger  profit 
than  other  business  of  like  labor  and  risk,  will  not  capital  be  invested 
in  new  banks  in  competition  with  existing  banks  until  the  profits  in 
banking  are  reduced  to  the  general  average  of  incomes  in  other  invest- 
ments? 

Mr.  Fairchild.  That  is  the  natural  law  of  such  things,  in  banking 
as  in  anything  else. 

Mr.  Walker.  Is  it  not  within  your  knowledge  that  in  Canada,  Scot- 
land, Germany,  and  France  the  rates  of  loans  and  discounts  all  over 
those,  countries  are  very  nearly  the  same  where  the  same  risk  is  incurred 
and  the  same  time  and  amount  is  involved? 

Mr.  Fairchild.  That  is  the  case  in  Canada,  and  I  understand  in 
Scotland  also. 

Mr.  Walker.  It  is  because  the  branches  in  the  country  allow  them 
to  circulate  such  an  enormous  amount  of  currency  that  it  is  possible. 
It  is  the  currency  privileges  of  banking  that  they  could  not  exercise  if 
they  were  strictly  a  city  bank;  but  with  branches  out  through  the 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC  217 

country  it  enables  them  to  circulate  their  currency,  which  keeps  the 
rates  down  in  the  country  as  compared  with  the  city? 
Mr.  Faircuild.  I  think  that  has  a  great  effect  upon  it. 

INTEREST  REDUCED  ONE  HALF. 

Mr.  Walker.  Assuming  that  the  money  made  on  its  deposits  by  a 
bank  with  a  capital  of  $100,000  was  exactly  equal  to  its  expenses  of 
every  name  and  nature,  including  the  current  redemption  of  its  cur- 
rency notes,  if  it  has  any,  and  assuming  the  bank  has  no  currency  notes 
to  issue  and  has  its  $100,000  funds  equal  to  its  capital  loaned  to  cus- 
tomers on  notes,  each  having  three  months  to  run  and  discounted  at 
the  rate  of  0  per  cent  per  annum,  the  net  profit  on  its  business  would 
just  equal  0  per  cent  on  its  capital  stock,  would  it  not? 

Mr.  Fairchild.  Its  deposits  pays  its  expenses 

Mr.  "Walker.  Of  every  name  and  nature.  It  has  $100,000  capital 
to  loan  and  no  currency? 

Mr.  Fairchild.  It  will  get  6  per  cent,  of  course. 

Mr.  Walker.  If  it  can  take  out  $100,000  currency  and  keep  it  in 
circulation,  it  can  make  loans  at  3  per  cent  and  make  the  same  amount 
of  profit! 

Mr.  Fairchild.  Exactly. 

CITY  BANKS  CAN  NOT  ISSUE   CURRENCY. 

Mr.  Walker.  Is  it  possible  for  city  banks  without  branches  to  cir- 
culate very  much  currency — those  banks  whose  business  is  what  might 
be  called  a  strictly  city  business? 

Mr.  Fairchild.  It  is  not. 

Mr.  Walker.  Practically  it  can  circulate  none:  it  comes  back  in  the 
clearing  house  the  next  morning? 

Mr.  Fairchild.  Yes. 

TAXING  CURRENCY  OBJECTIONABLE. 

Mr.  Walker.  Is  not  this  2  per  cent  tax  on  currency  between  GO  per 
cent  and  80  per  cent,  in  view  of  what  I  have  said  about  Vermont  and 
Virgiuia,  a  restriction  working  a  hardship,  and  does  it  not  work  exclu- 
sively to  the  expense  and  hindrance  of  the  circulation  in  country  dis- 
tricts, where  they  actually  need  considerably  above  the  GO  per  cent? 

Mr.  Fairchild.  I  think  that  is  the  objection  to  it.  That  is  my 
objection. 

BANK   LOSES  INTEREST   ON  BOND-SECURED   CURRENCY. 

Mr.  Walker.  Where  currency  is  issued  as  it  is  to-day,  does  not  the 
bank  actually  lose  on  each  dollar  of  currency  not  in  circulation  an 
amount  equal  to  its  rates  of  loans  and  discounts,  less  the  profit  the 
bank  would  make  were  all  its  currency  notes  in  circulation? 

Mr.  Fairchild.  Yes;  that  is  true. 

Mr.  Walker.  Does  not  any  system  of  currency  that  makes  the  cur- 
rency held  in  the  vaults  of  a  bank  an  actual  loss  to  the  bank  under  any 
circumstances  compel  the  bank  to  increase  the  loan  and  discount  rates 
to  the  people  to  an  amount  equal  to  the  losses  made  on  the  currency 
that  it  holds  in  its  vaults? 

Mr.  Fairchild.  It  does. 


218 


STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 


UNITED  STATES  BOND-SECURED  CURRENCY  A  "  PER  CENT  RATE 

CURRENCY." 

Market  price  of  United  States  4  per  cent  bonds  of  1907. 


June  30— 

1881.. 
1882.. 
1883.. 


1884. 

1885. 
1886. 
1887. 
1888. 

1889. 

1890. 

1891. 

1892. 

1893. 

1894. 


Quotations  of 

market  price  of 

bonds. 


1S95 

New  "fours"  of  1925. 
February  5,  1896 


117£ 

118j 

120 

118t 

119£ 

118J 

1191 

123$ 

126 

127 

125£ 

127| 

128£ 

128* 

129| 

121} 

122| 

116* 

117* 

llOj 

117£ 

109 

110 

113 

114g 

112 

113* 

112 


E. 

C. 


E. 
C. 
E. 
C. 


E. 
C. 


Rate  real- 
ized. 


E, 
C. 
E. 
C. 
E. 
C. 
E. 
<J. 
E. 
C. 
E. 
C. 
E. 
C. 
E. 
C. 


Per  cent. 
3.047 
2.  926 

2.895 

2.909 
2.654 
2.403 
2.448 
2.243 

2.095 

2.451 

2.735 

2.666 

3.200 

2.749 

2.753 

3.351 


National-bank 
currency  notes 
in  circulation. 


6312, 223, 352 
308,  921,  898 
311, 963, 302 

295, 175, 334 
269, 147,  690 
238, 273,  685 
166,  625,  658 
155, 315, 353 

128,  867, 425 

126, 323,  880 

123,  915, 643 

141,  661, 533 

155, 070,  821 

171,  714,  552 

178, 815,  801 

212, 023, 386 


This  table  shows  that  the  4  per  cent  bonds  of  1907  bonds 
average  to  sell  at  prices  to  the  purchaser  in  1889,  per 
cent 2.  095 

Average  to  pay  at  prices  sold  for  during  1887. 1888,  and 
1889,  three  years per  cent. .  2.  292 

From  1883  to  1892,  the  eight  years  previous  to  the  panic 

of  1893 per  cent. .  2.  462 

Note  circulation  of  national  banks  in  1881 $312,  223,  352 

Note  circulation  of  national  banks  on  June  30,  1890 126, 323,  880 

And  this  decrease  in  bank-note  circulation  was  before 
the  increase  in  currency  under  the  silver  act  of  July 
14,  1890. 

National  bank  note  circulation  one  year  later,  January  30, 

1891,  was  only 123,  915,  043 

National-bank  note  circulation  on  February  5,  1896,  be- 
cause of  ruined  Government  credit,  has  run  up  to 212,  023,  386 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  219 

Mr.  Walker.  I  wish  you  to  look  carefully  at  this  table,  and  answer 
tliis  question:  Whether  it  is  not  fair  to  say  that  a  currency  thai  sin  inks 
as  bonds  appreciate  and  that  increases  as  bonds  depreciate  is  a  freak 
currency? 

Mr.  Fairchild.  Well,  I  should  think  that  it  is  a  very  bad  currency, 
but  exactly  what  the  financial  and  scientific  application  of  "freak"  is 
I  am  not  prepared  to  say. 

OUR  CURRENCY  SYSTEM  THE  WORST  IN  THE  "WORLD. 

Mr.  Walker.  In  testifying  before  the  committee  last  year,  after 
considerable  discussion  and  answering  questions  upon  the  point,  the 
Comptroller  of  the  Currency,  Mr.  Eckels,  put  his  appreciation  of  the 
financial  system  in  these  words:  "Yes;  the  United  States  has  the 
worst  financial  and  currency  system  of  any  leading  nation."  What  do 
you  think  about  our  financial  and  currency  system,  as  compared  with 
those  of  other  leading  nations  of  the  world? 

Mr.  Fairchild.  I  think  it  is  the  worst. 

Mr.  Walker.  You  understood  the  question  to  be  comparatively  and 
not  specially  or  personally  denouncing  our  currency,  but  that,  as  com- 
pared with  other  nations,  it  is  the  worst  of  any  you  know  of  among 
leading  nations? 

Mr.  Fairchild.  Yes. 

Mr.  Brosius.  I  understand  that. 

PROTECTION   OF   STOCKHOLDERS. 

Mr.  Fairchild.  Now,  there  is  no  way  that  I  know  of  to  protect  the 
stockholders  and  depositors  except  by  greater  vigilance  in  your  exam- 
inations and  that  sort  of  thing. 

Mr.  Van  Voorhis.  Do  you  not  think  we  could  retire  a  portion  of  the 
obligations  of  the  Government,  and  by  retiring  the  small  notes  and 
refunding  the  bonds  that  are  now  outstanding,  on  a  2£  per  cent  basis, 
perhaps,  do  you  not  think  we  could  have  a  secured  currency  ? 

Mr.  Fairchild.  That  would  not  be  sufficient.  We  could  have  secured 
currency,  but  I  do  not  think  that  a  secured  bank-note  currency  at 
all  answers  the  purpose  of  a  community  in  its  true  sense  of  a  bank 
currency. 

The  Chairman.  What  do  you  mean  by  "secured?" 

Mr.  Van  Voorhis.  Secured  by  bonds. 

Mr.  Fairchild.  Of  course,  it  is  all  secured,  but  it  is  the  method  of 
securing  it. 

Mr.  Van  Voorhis.  I  have  questioned  all  the  way  through  the  pro 
priety  of  issuing  this  credit  currency  unless  we  could  have  a  secured 
currency  based  on  the  bonds  of  the  Government.  1  believe  that  would 
be  better. 

Mr.  Fairchild.  You  can  not  have  a  currency  based  on  the  deposited 
bonds  of  the  Government  that  is  any  more  secure  than  the  currency  we 
offer  here.     It  is  not  a  bit  more  secure  and  not  nearly  so  useful. 

Mr.  Walker.  Are  not  the  currency  notes  issued  by  banks  every 
way  sound,  and  quickly  available,  with  the  guaranty  for  the  payment 
in  case  of  insolvency  of  the  bank  written  in  the  statute  authorizing  the 
issue  of  them,  and  appropriating  the  money  necessary  to  pay  for  and 
create  a  safety  fund,  to  pay  them — in  every  way  as  safe  as  a  currency 
created  by  bonds? 

Mr.  Fairchild.  I  should  say  so.  It  is  an  obligation  of  the  Govern- 
ment in  one  case  as  it  is  in  the  other,  I  think. 


220  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

The  Chairman.  The  principle  of  the  present  law  is  to  take  out  of 
the  bank  the  day  it  begins  business  all  of  its  capital  and  lock  it  up  so 
it  can  not  loan  it. 

Mr.  Taylor.  I  agree  with  you. 

Mr.  Cox.  *  *  *  INow,  you  being  an  experienced  man  in  finance, 
is  not  the  community  itself  the  best  judge  of  what  currency  it  needs 
and  what  currency  the  community  can  handle? 

Mr.  Fairchild.  Undoubtedly. 

Mr.  Cox.  Then  would  you  not  be  in  favor  of  a  law  that  would  repeal 
this  tax  and  prohibit  the  local  currency? 

Mr.  Fairchild.  My  individual  opinion  on  that  subject  is  now  and 
always  has  been  that  the  United  States  should  provide  as  perfect  a 
banking  system  as  it  can.  *  *  *  The  laws  and  constitutions  of 
many  of  our  States  are  such  that  you  can  not  get  any  local  circulation 
under  them.  Texas,  I  believe,  absolutely  prohibits  a  thing  of  that 
kind.  Therefore,  in  order  to  make  anything  that  is  complete  in  the 
attitude  of  our  States  toward  it  now,  it  is  evident  that  it  is  not  only 
better  to  have  a  national  system,  but  it  is  absolutely  necessary.  To 
supply  Texas,  for  instance,  Arkansas,  and  quite  a  number  of  those 
States,  it  is  absolutely  necessary  to  have  a  national  system,  or  else 
they  would  have  to  reverse  their  whole  action,  and  that  would  be  a  long 
process. 

The  Chairman.  *  *  *  Under  the  Walker  bill,  the  currency  of 
which  is  issued  on  the  true  currency  principle,  the  profit  is  identical  on 
each  $1  in  circulation. 

Secretary  Gage.  I  have  no  doubt,  Mr.  Chairman,  that  your  bill  offers 
better  inducements  and  more  profit  to  the  bankers  than  our  bill. 

The  Chairman.  Have  you  any  doubt  that  it  works  out  just  as  safe 
to  the  Government,  to  the  banks,  and  to  the  holders  of  currency  ? 

Secretary  Gage.  No,  I  have  not;  with  proper  restrictions  and 
limitations. 

BANKS  PROTECT  BORROWERS  IN   PANIC. 

The  Chairman.  Is  it  not  a  fact  that  the  minute  a  bank  is  threatened 
all  the  business  community  rushes  to  increase  their  discounts  and  loans 
and  deposits,  and  that  that  is  what  intensifies  the  panics  so  much,  plus 
the  drawing  out  of  deposits? 

Mr.  Fairchild.  You  mean  it  tends  to  borrowing  of  more  money? 

The  Chairman.  Yes.    They  want  to  increase  their  loans  and  discounts. 

Mr.  Fairchild.  Yes;  they  do  that. 

The  Chairman.  Banks  then  say:  "We  can  not  increase  your  loans, 
but  we  will  take  care  of  you;"  and  saying  that  all  over  the  country 
checks  the  panic.    That  is  true,  is  it  not? 

Mr.  Fairchild.  Yes. 

CURRENCY  NOT   ISSUED  AGAINST  DEPOSITS. 

Mr.  Brosius.  Do  you  think  it  desirable,  and  if  so,  on  what  principle, 
to  issue  currency  against  deposits?  *  *  *  Your  bill  provides  lor 
issuing  currency  against  the  assets  of  the  banks.  Of  course,  you  under- 
stand that  the  deposits  are  a  part  of  the  assets. 

Mr.  Fairchild.  Oh. 

Mr.  Fowler.  The  deposits  are  not  assets. 

Mr.  Brosius.  Yes,  they  are. 

Mr.  Fowler.  They  are  liabilities. 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  221 

Mr.  Brosius.  Take  all  your  deposits.  Your  currency  is  the  first  lien 
upon  all  the  assets  of  the  banks. 

Mr.  Faikchild.  You  mean  the  reverse.  The  deposits  are  a  liability. 
The  deposits  are  a  lien  upon  the  assets. 

Mr.  Urosius.  I  do  not  care  about  the  use  of  technical  words.  The 
point  is  that  when  you  issue  the  currency  against  the  assets  of  a  bank 
and  make  those  notes  the  first  lien  upon  the  assets,  that  act  covers  the 
deposits  and  the  depositor  loses  his  money  just  in  proportion  as  his 
money  is  taken  to  make  good  the  notes.  Do  yon  think  it  desirable,  on 
general  principles,  to  issue  currency  against  assets  and  make  that  cur- 
rency the  first  lien  upon  the  depositor  s  money  in  the  vaults  of  that 
bank? 

Mr.  Fairchild.  I  do. 

Mr.  Brosius.  Upon  what  principle  can  you  justify  it? 

Mr.  Fairchild.  A  depositor  need  not  put  his  money  there  unless  he 
wants  to.  He  knows  what  the  arrangement  of  the  bank  is.  That  is 
true  to  day. 

Mr.  Brosius.  You  say  that  is  exactly  what  you  do  to-day? 

Mr.  Fairchild.  Yes. 

DEPOSITORS  FREELY  TAKE   THE  RISK. 


Mr.  Brosius.  So  in  any  event  the  loss  falls  upon  the  depositors? 

Mr.  Fairchild.  It  always  does. 

Mr.  Brosius.  Is  it  not  fair  to  assume  that  in  cases  of  fraud  such  as 
you  suggest,  where  the  capital  of  a  bank  is  simply  gobbled  up,  if  they 
had  not  deposited  a  certain  amount  of  capital  in  place  of  the  bonds, 
they  would  have  stolen  that  also?  And  is  it  not  a  clear  question  of 
saving  whatever  amount  of  bonds  they  deposit? 

RASCALS  STEAL  THE   WHOLE  BUSINESS. 

Mr.  Fairchild.  They  would  have  stolen  that  also. 

Mr.  Brosius.  They  can  not  steal  bonds,  you  know. 

Mr.  Fairchild.  They  have  stolen  the  whole  business  in  the  same 
way.  The  net  result  in  dollars  and  cents  to  the  stockholders  of  that 
bank  is  the  same.  Of  course  when  they  have  invested  in  common 
bonds  they  have  their  notes  banked,  because  they  have  run  away,  and 
have  done  the  same  thing  with  the  deposits.  The  notes  stand  there 
to  get  the  United  States  bonds,  but  the  capital  and  the  stock  and 
everything  is  gone. 

.Mr.  Brosius.  No;  but  the  bonds  are  not  gone,  Mr.  Fairchild,  and 
therefore  the  note-holder  is  made  whole. 

Mr.  Fairchild.  That  I  admit — that  the  note-holder  is  made  whole; 
but  every  dollar  that  was  put  into  that  bank  is  gone. 

.Mr.  Brosius.  I  do  not  see  it  in  that  way.  because  the  bonds  were 
paid  for  by  a  part  of  the  capital,  and  that  portion  could  not  be  gotten 
away. 

Mr.  Fairchild.  The  only  thing  that  remains  at  present  is  the  differ- 
ence between  the  premium  on  bonds  and  the  amount  of  notes  that 
they  got. 

Mr.  Brosius.  Whatever  remains  goes  to  the  note-holders  to  pay  the 
notes? 

Mr.  Fairchild.  Yes. 


222  STRENGTHENING    THE    PUBLIC    CREDIT,   ETC. 

Mr.  Brosius.  The  point  that  I  make  is  that  if  a  portion  of  that 
capital  had  not  been  invested  in  the  bonds  the  whole  thing  would  have 
been  stolen,  and  neither  note-holder  nor  depositor  would  have  gotten 
anything. 

fOTE-HOLDER  SECURE. 

Mr.  FAiRcniLD.  As  far  as  the  note  holder  is  concerned,  we  have  pro- 
vided for  taking  care  of  him  as  securely  as  he  is  taken  care  of  now. 

CANCELING  SILVER   CERTIFICATES — POPULAR    USE   OF   COIN  MONET. 

Mr.  Fowler.  If  the  certificates — the  ones,  twos,  and  fives — were  all 
canceled,  and  the  silver  was  out  at  the  end  of  a  year,  do  you  not  think  the 
people  would  be  as  well  satisfied  as  they  are  now  with  the  certificates? 
With  California  before  you  as  an  illustration,  with  Mr.  Garnett,  who 
lives  there,  refusing  to  sign  the  report  recommending  this  bill,  because 
he  uses  silver,  and  with  the  practices  of  Germany  and  France  and  other 
countries  before  you,  do  you  not  think  that  at  the  end  of  a  year  the  peo- 
ple would  be  just  as  well  satisfied  with  the  silver  as  they  would  be  now 
with  the  small  certificates'? 

Mr.  Taylor.  I  do  not  think  so.    They  would  take  it  if  they  had  to. 

Mr.  McCleary.  Would  not  that  fact— the  presence  of  the  gold  and 
silver  in  the  hands  of  the  people  from  day  to  day — be  the  best  kind  of  an 
education  in  the  other  direction  that  you  spoke  of  a  while  ago?  Would 
it  not  be  the  best  kind  of  an  education  as  to  what  money  really  is? 

Mr.  Taylor.  Well,  it  would  be  a  good  object  lesson,  but  I  do  not 
think  I  am  prepared  to  say  it  would  be  the  best  one. 

The  Chairman.  Would  not  that  be  the  only  way  to  find  out  what 
the  people  want  and  to  get  their  opinion  of  any  currency  system? 

Mr.  Taylor.  Yes,  sir. 

The  Chairman.  Do  you  know  of  any  other  Government  in  the  world 
that  coins  money  and  then  itself  issues  paper  representatives  of  it 
direct? 

Mr.  Taylor.  I  do  not  know  that  I  ever  heard  of  one. 

The  Chairman.  Does    not    that  contradict    the  whole    theory  of 


nage? 


Mr.  Taylor.  I  think  it  does.  I  think  it  is  an  inconsistency  in  our 
system. 

******* 

The  Chairman.  Is  it  not  a  fact  that  a  very  large  body  of  our  people, 
children  especially,  who  handle  a  large  part  of  the  money  in  taking  it 
to  stores,  and  the  very  large  laboring  population  of  the  South,  and  the 
ordinary  laboring  men,  can  carry  coin  in  their  pockets  with  greater 
safety  and  less  liability  of  loss  than  they  can  carry  paper,  and  is  it  not 
also  true  that  the  paper  often  gets  wet  and  crumples  up  and  the  germs 
of  disease  get  in  it,  and  everything  of  that  kind  ?  So,  would  it  not  be 
of  great  sanitary  benefit  and  economic  benefit  in  every  way  in  protect- 
ing the  people  from  loss  to  have  all  money,  say  under  $5,  in  coin? 

Mr.  Taylor.  There  is  great  force  in  that,  Mr.  Chairman,  and  I  think 
our  people  would  be  better  off  if  that  could  be  brought  about.  I  think 
they  would  be  better  off  if  they  used  more  coin  money.  I  may  be  tell- 
ing tales  out  of  school,  but  I  will  say  that  when  this  was  under  discus- 
sion in  the  commission  I  made  a  motion  that  the  smallest  paper  bill 
should  be  $3  as  a  compromise.  I  think  the  people  would  stand  that, 
without  much  complaint.    I  believe  if  you  would  go  to  $5  there  would 


STRENGTHENING  THE  PUBLIC  CREDIT,  ETC.       223 

be  a  great  deal  of  complaint,  but  that  if  you  say  $.3  the  people  would 
not  seriously  complain,  and  perhaps  in  that  way  you  could  accustom 
them  to  the  use  of  coin,  and  eventually  they  would  allow  $5  to  be  the 
lowest  denomination  of  paper  money. 

Mr.  Newlands.  Do  you  not  think  that  in  this  country  there  are  a 
great  many  people  who  do  not  know  that  the  silver  is  still  in  circula- 
tion through  the  silver  certificates? 

Mr.  Taylor.  I  can  not  say  that  I  have  found  any  such  people  among 
my  acquaintances. 

Mr.  Newlands.  I  have  met  with  a  great  many  myself,  and  abroad  I 
found  that  that  was  quite  a  general  impression,  that  we  had  a  great 
stock  of  silver  here  and  that  it  was  not  utilized. 

Mr.  Taylor.  That  might  be  so.    I  can  not  say. 

The  Chairman.  Whether  that  is  so  or  not,  not  one  man  in  a  thou- 
sand, when  he  receives  a  bill,  stops  to  see  whether  it  is  a  bank  note  or 
a  silver  certificate,  or  what  it  is.  Unless  his  attention  is  especially 
called  to  it,  he  does  not  notice  it.  There  is  no  distinction;  he  thinks 
that  it  is  all  national  bank  money. 

Mr.  Taylor.  Very  few  people  notice  the  difference,  or  think  of  the 
difference. 

The  Chairman.  And  they  do  not  know  that  this  coin  is  collateral 
for  these  silver  certificates'? 

Mr.  Taylor.  Very  few  people  think  of  that.  That  is  one  of  the  con- 
sequences of  the  greenback  circulation.  It  has  accustomed  the  people 
to  take  pieces  of  paper  with  pictures  on  them.     That  is  all  they  notice. 

The  Chairman.  Is  it,  then,  your  opinion  that  the  general  feeling  of 
affection  which  the  people  seem  to  have  for  the  greenbacks  is  because 
they  want  the  paper  money? 

Mr.  Taylor.  No;  not  that  merely;  not  because  they  want  paper 
money  merely.  I  think  the  affection  of  the  people  for  the  greenbacks 
is  a  peculiar  patriotic  instinct.  The  greenback  is  associated  in  their 
minds  with  the  preservation  of  the  Union. 

The  Chairman.  And  you  think  the  majority  of  the  people  in  the 
ordinary  way  of  life  draw  the  distinction  between  the  greenback  and 
the  bank  note,  and  so  on? 

Mr.  Taylor.  Not  at  all. 

The  Chairman.  That  is  what  I  meant. 

Mr.  Taylor.  No;  not  at  all.  In  actual  transactions  I  think  men  very 
rarely  take  notice  of  what  kind  of  money  they  are  handling. 

BANKING  IN  AGRICULTURAL   COMMUNITIES. 

Mr.  Hill.  What  is  the  purpose  of  section  12,  providing  for  small 
banks? 

Secretary  Gage.  More  particularly  for  agricultural  communities. 
There  is  always  a  ^aiall  business  center  somewhere  in  every  sort  of 
community. 

Mr.  Hill.  Generally  speaking,  you  now  refer  to  agricultural  com- 
munities, in  which  there  would  largely  be  agricultural  loans? 

Secretary  Gage.  Very  largely. 

Mr.  Hill.  Do  you  believe  it  is  possible  for  a  national  bank  or  any 
bank  to  be  made  a  bank  of  issue  with  the  facilities  for  prompt  redemp- 
tion which  you  have  provided  here,  making  agricultural  loans  against 
notes  issued  on  demand? 

Secretary  Gage.  I  think  agricultural  loans,  properly  made,  are  among 
the  best  loans  in  the  world. 


224  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

Mr.  IIill.  I  know  it,  but  can  they  be  made  as  against  demand  issues 
of  bank  notes? 

Secretary  Gage.  They  can,  within  reasonable  range;  yes,  sir. 

Mr.  Hill.  How  is  it  possible  for  a  bank,  say,  of  $25,000,  situated  in 
an  agricultural  community,  to  exchange  its  circulating  notes  for  long- 
time agricultural  notes  and  maintain  redemption  of  its  own  notes? 

Secretary  Gage.  By  "long-time  agricultural  notes"  do  you  mean  four 
or  five  year  loans? 

M  r.  Hill.  I  mean  six  months,  as  against  their  own  notes  outstanding. 

Secretary  Gage.  1  think  they  could. 

Mr.  Hill.  In  what  way  would  they  be  able  to  do  it? 

Secretary  Gage.  Because  the  community  we  are  supposing  is  a 
community  where  the  circulating  capital  is  small,  and  as  long  as  crops 
were  in  process  of  being  gathered  and  brought  to  market,  and  the 
expenses  connected  with  them  being  paid  off,  there  would  be  a  local 
use  for  any  circulating  medium  which  this  bank  would  supply,  and  it 
would  stay  there  until  crops  (which  ought  to  be  more  or  less  varied  in 
every  community,  and  are  more  or  less  varied),  would  begin  to  go  for- 
ward to  market;  and  that  generally  happens  four  or  five  months  before 
the  following  crop  is  sown  and  the  expense  incidental  to  raising  that 
crop  inaugurated.  Wben  the  crop  goes  to  market  the  fund  would  be 
found  to  redeem  the  notes.  The  notes  would  find  their  way  to  the 
redemption  centers  if  the  community  owed  more  than  the  crops  paid. 
Then  the  notes,  like  any  other  form  of  money,  would  go  forward  to  settle 
the  difference,  and  they  would  be  redeemed.  *  *  *  It  is  now  an 
impoverishment  of  a  community  to  start  a  national  bank.  Take  a  little 
community  that  can  scarcely  raise  $50,000  capital.  What  does  the 
Government  require  of  it?  It  requires,  in  the  first  place,  $25,000  of  that 
to  be  sent  to  Wall  street  to  buy  bonds,  and  then  it  may,  and  as  it  may 
it  must,  because  it  is  too  poor  not  to  do  it,  put  these  bonds  up  with  the 
Treasurer  of  the  United  States,  and  for  the  $25,000  of  bonds,  which 
have  cost  over  $30,000,  it  may  get  $22,500  of  its  own  notes — not  Gov- 
ernment notes,  but  its  own  notes — which  it  may  have  the  privilege  of 
loaning  to  the  community.  That  is  an  impoverishment  to  the  commu- 
nity, substantially,  of  30  per  cent  on  capital  it  had  before  it  started  the 
bank. 

LARGE  BANKS  "CARRY"  SMALL  BANKS. 

Mr.  Hill.  Do  you  think,  in  your  experience  as  a  banker,  not  as 
Secretary  of  the  Treasury,  that  as  a  matter  of  fact  the  large  reserve 
banks  of  the  country  do  frequently  have  to  carry  the  smaller  banks? 

Secretary  Gage.  They  do  to  a  considerable  extent. 

Mr.  Hill.  Do  you  think,  then,  they  would  object  to  this  credit-note 
system,  as  giving  to  the  country  banks  a  first  lien  upon  all  their  assets 
for  these  reserve  notes  and  thus  imperiling  their  claims  against  the 
country  banks? 

Secretary  Gage.  I  do  not  think  they  would  object  on  that  ground  at 
all,  because  they  always  make  sure  they  themselves  have  a  good  lien 
on  assets  before  they  take  care  of  the  country  banks. 

BANKS  PROTECT  THEIR  CUSTOMERS. 

The  Chairman.  Is  it  not  a  fact  that  the  minute  a  bank  is  threatened 
all  the  business  community  rush  to  increase  their  discounts  and  loans 
and  deposits,  and  that  that  is  what  intensifies  the  panics  so  much,  plus 
the  drawing  out  of  deposits? 


STRENGTHENING  THE  PUBLIC  CREDIT,  ETC.        225 

Mr.  Fairchild.  You  mean  it  tends  to  borrowing  of  more  money? 

The  Chairman.  Yes;  they  want  to  increase  their  loans  and  discounts. 

Mr.  Fairchild.  Yes;  they  do  that. 

The  Chairman.  Banks  then  say,  "We  can  not  increase  your  loans, 
but  we  will  take  care  of  you;"  and  saying  that  all  over  the  country 
checks  the  panic.    That  is  true,  is  it  not? 

Mr.  Fairchild.  Yes. 

BONDS  KEPT  UP  IN  PRICE. 

Mr.  Fairchild.  In  getting  up  this  plan  the  policy  we  pursued  in  the 
commission 

The  Chairman.  That  is  exactly  what  I  want  to  get  at. 

Mr.  Fairchild  (continuing).  Was  to  propose  something  which  we 
thought  would  be  complete  and  useful  and  workable,  if  adopted  by 
Congress.  We  considered  two  lines.  First,  whether  we  should  attempt 
to  frame  something  which  we  thought  would  meet  the  views  of  any 
particular  Congress,  looking  to  the  make-up  and  the  general  views  of 
Congress.  And  the  other  consideration  was  whether  we  should  proceed 
solely  without  reference  to  that,  but  to  get  something  that  we  believed 
would  be  beneficial  if  enacted,  leaving  out  of  view  entirely  the  proba- 
bilities of  its  enactment.  We  concluded  to  adopt  the  latter  course, 
believing  it  was  not  our  province  to  take  into  consideration  the  temper 
and  disposition  of  Congress,  so  we  have  proceeded  not  on  the  question 
of  policy  of  passing  a  bill,  but  on  the  question  of  the  general  policy  if  a 
bill  were  passed. 

Mr.  Walker.  The  changes  proposed  in  any  bill  would  be  agreeable 
should  it  involve  no  practices  or  conditions  that  had  not  proven  to  be 
wise  in  the  actual  practice  of  banking,  and  correct  those  practices  found 
to  be  unwise? 

Mr.  Fairchild.  Certainly;  *  *  *  any  one  of  these  measures, 
or  all  of  them  combined,  which  will  accomplish  the  general  result  is 
perfectly  satisfactory  to  that  commission.     *     *     * 

Mr.  Spalding.  In  the  event  of  the  success  of  the  monetary  commis- 
sion's plan,  would  it  have  any  effect  on  the  price  of  the  bonds  of  the 
United  States  Government,  in  your  opinion;  and  if  so,  why? 

Mr.  Fairchild.  We  tried  to  graduate  that.  Getting  at  the  amount 
held,  and  looking  at  the  way  bonds  were  held  among  the  banks,  we 
fixed  the  amount  of  25  per  cent  of  the  capital  in  that  way,  with  a  view 
of  having  it  have  as  little  effect  as  possible  on  the  rise  or  fall  of  bonds. 

Mr.  Spalding.  What  effect,  in  your  opinion,  would  there  be  in  the 
adoption  or  the  passing  of  a  law  in  which  the  bonds  were  not  used  as 
a  security  for  the  circulating  medium  at  all? 

Mr.  Fairchild.  Oh,  it  might  affect  their  price  a  little.  I  doubt  if  it 
would  a  fleet  it  much  now;  perhaps  1,  2,  or  3  per  cent.  I  do  not  know 
about  that. 

Mr.  Walker.  Your  bill  is  of  such  a  nature  that  you  claim  it  would 
not  very  materially  affect  the  price  of  bonds.  If  it  had  any  tendency, 
it  would  make  them  higher,  would  it  not  1 

Mr.  Fairchild.  Possibly  a  little;  but  looking  at  the  distribution  of 
the  bonds,  we  fixed  the  amount  first  at  30  percent,  and  then  reduced 
it  to  25  per  cent  on  that  ground. 

Mr.  Walker.  Then  the  requirement  to  purchase  bonds  in  order  to 
get  currency  has  a  tendency  to  make  bonds  higher  priced  .' 

Mr.  Fairchild.  That  would  be  the  tendency. 

B  &  C 15 


226 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 


INTERINDEBTEDNESS   OF   THE   UNITED   STATES. 

Mr.  "Walker.  I  will  now  ask  a  question  on  a  different  line.  It  is 
assumed  that  banks  are  not  a  help  to  the  people  because  they  increase 
their  indebtedness;  that  is  to  say,  we  hear  the  proposition  stated  on  the 
floor  of  the  House  and  other  places  that  indebtedness  is  an  indication 
of  poverty.  I  want  you  to  look  at  this  table  [handing  him  a  table].  I 
have  taken  great  pains  by  correspondence  and  otherwise,  and  by  my 
own  estimates  and  estimates  which  I  have  obtained  from  others,  and  by 
the  authorities  given,  to  state  the  total  sum  of  indebtedness. 

Table  showing  the  indebtedness  of  the  United  States  in  1892,  prepared  by 
Hon.  J.  H.  Walker,  chairman  of  Committee  on  Banking  and  Currency. 

Census  of  1890,  assessed  valuation :    Assets  of  the 

country,  real  and  personal  property $25, 000,  000, 000 

Secretarv  of  Treasury : 

Gold  and  silver  coin 1,  200,  000,  000 


Total 26,  200 


National  debt  less  cash  in  Treasury  . 
Census  of  1890: 

State  debt  less  sinking  fund 

County  debt  less  sinking  fund 

Town  and  city  debt  less  sinking  fund 

Porter:  School-district  debt 

Poor's  Manual,  railroad  indebtedness  : 

Funded  debt 

Unfunded  debt 

Current  debt 


New   York    Financial  Review,   1890:    Miscellaneous 
stocks  and  bonds 

Farm  mortgages 

Home  mortgages 

Other  town  and  city  property  mortgages 

Estimated  debts  of  merchants 

Debts  of  individuals  aud  families 

Comptroller  of  the  Currency: 

Deposits  in  mutual  savings  banks 

Deposits  in  stock  savings  banks 

Deposits  in  private  savings  banks 

Deposits  in  loan  and  trust  companies 

National  banks 

State  banks 

New  York  Daily  Commercial  Bulletin: 

Annual  fire-insurance  losses,  $125,000,000;  life  of 
policy,  three  years 

Marine  insurance 

Life  insurance  in  force 

Industrial  business  insurance 

Benevolent  associations  and  fraternal  orders 


852 

223 

142 

470 

38 

5,106 
376 
271 

582 
1.  086 
1, 047 
3,887 
5,  000 

400 

1,402 

252 

95 

353 

1,588 
557 


375 

50 

3,543 

313 
6,000 


000, 000 


000, 000 


000, 000 
000,  000 
000, 000 


000,  000 

000. 000 
000, 000 
000, 000 

000,  000 
000, 000 
000, 000 
000,  000 
000, 000 
000,  000 

000, 000 
000,  000 
000, 000 
000,  000 
000,  000 
000,  000 


000, 000 
000,  000 
000, 000 
000,  000 
000,  000 


Interindebtedness  in  the  country 34, 208,  000,  Oct) 


STRENGTHENING   THE    PUBLIC    CREDIT,  ETC.  227 

INTERINDEBTEDNESS  AN  EVIDENCE  OF  INTEGRITY  AND   WEALTH. 

Mr.  Walker.  Is  it  not  generally  held  by  economists,  Mr.  Fairchild, 
that  the  interindebtedness  of  a  people,  at  a  low  rate  of  interest,  instead 
oi  being  an  evidence  of  poverty  or  of  hard  conditions,  is  one  of  the  most 
certain  indications  known  of  the  average  integrity,  education,  wisdom, 
and  wealth  of  its  people? 

Mr.  Fairchild.  It  is. 

Mr.  Walker.  As  the  integrity,  education,  wealth,  and  peaceful  con- 
ditions  are  measured,  the  use  of  paper  money  proportionately  increases, 
and  that  of  coin  decreases.    Is  not  that  true? 

Mr.  Fairchild.  Well,  1  would  not  like  to  say  that  quite  so  broadly. 
The  use  of  paper  is  another  advance  in  more  perfect  civilization  and 
the  economy  of  capital,  in  my  judgment,  and  the  greater  the  faith  of 
people  one  in  another,  the  higher  the  civilization  will  be;  and  all  these 
conditions  you  have  spoken  of  tend  to  produce  that  faith. 

Mr.  Walker.  Except  for  our  war  of  disunion,  we  have  had  peace 
practically  since  the  war  of  1812 — and  that  was  not  much  of  a  war — 
while  in  France  the  Government  has  been  constantly  overturned,  and 
a  feeling  of  unrest  has  existed  there;  and  England  is  in  a  state  of  war. 
They  are  engaging  in  some  kind  of  a  war  nearly  all  the  time,  and  you 
know  what  the  conditions  have  been  in  Germany;  while  in  Scotland, 
Canada,  and  this  country  there  has  been  comparative  peace.  My  ques- 
tion involves  the  fact  of  the  people's  condition.  In  view  of  all  the  facts, 
do  not  the  paper  money  and  assured  peace  go  together? 

Mr.  Fairchild.  I  should  think  they  did. 

Transition  from  present  system  to  the  Hill-Foicler  system  and  the  Walker 

system. 

If  all  the  national  banks  in  the  United  States  should  transfer  into 
the  system  provided  for  in  the  Hill-Fowler  bill  (H.  R.  10289)  or  into  the 
system  provided  for  in  the  Walker  bill  (H.  E.  10333),  the  results  as  to 
circulation  would  be  as  follows: 

hill-fowler  bill. 

(a)  Cities  of  10,000  population  and  over  (25  per  cent  of 

paid-in  capital,  $451,147,525) $112,  786,  8S1 

(b)  Places  under  10,ooo  population  (25  per  cent  of  paid-in 

capital,  $180,340,570) 45,  085, 142 

Total  national  reserve  notes  that  would  be  issued.     157, 872,  023 

WALKER  BILL. 

In  national  banks  alone: 

(c)  Cities  of  10,000  population  and  over  (12*  percent 

of  true  capita] — capital,  surplus,  and  undivided 

profits— $712,955,136) 89, 119.  :,.!>2 

(d)  Places  under  10,000  population  (12*  per  cent  of  the 

capital,  $253,281,959) 31,  660,  620 

Total  "greenbacks"  that  would  be  exchanged 120,  780.  012 

All  State  banks  required  to  assume  United  States  notes.       4  i .  290,  873 

Total  United  States  notes  exchanged 1GS,  070. 


228  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

Under  the  Hill-Fowler  bill  banks  are  required  to  buy  and 
pay  United  States  legal  notes  for  purely  a  bank 
note  to  the  amount  of  25  per  cent  of  their  paid- 
in  capital,  and  they  get  no  right  whatever  to 
issue  any  notes  other  than  those  they  buy. 
Amount  as  above $157, 872, 023 

Under  the  Walker  bill  national  banks  and  commercial 
State  banks  are  required  to  exchange  lawful 
money  for  a  new  issue  of  "greenbacks,"  with 
their  own  note  printed  on  the  back  of  them,  to 
the  amount  of  ll'i  per  cent  of  their  actual  capi- 
tal—total      1G8,  070,  885 

And  can  issue  currency  against  their  assets  to  an  equal 

amount 168, 070, 885 

Total  currency  under  Walker  bill 336, 141,  770 


STRENGTHENING    THE    PUBLIC    CR€I  IT,   ETC. 


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Table  B. 


235 


Assuming  that  the  use  of  banking  funds  in  1897,  that  is  to  say,  capi- 
tal, deposits,  and  currency,  would  be  one-quarter  more  in  volume  than 
in  1860,  the  slaves  being  free,  the  following  sums  should  be  added  for 
each  State  named: 


State. 

Amount. 

State. 

Amount. 

Alabama 

$7,  478,  875 
14, 933, 050 
13,  067, 475 

4, 054, 304 
10,  348,  819 

6, 144,  560 

South  Carolina 

Tennessee. . 

$13,916,  L60 
7,  767, 188 

Georgia 

Kentucky 

Virginia 

9,  282,  000 

Louisiana 

Total 

Missouri 

86.992    131 

North  Carolina 

Table  C. 


Assuming  that  the  slaves  being  free  to-day  would  add  one-quarter 
to  the  use  of  banking  funds,  the  amount  of  such  funds  that  would  be 
in  use  in  the  following  nine  States,  providing  that  the  freedom  of  issu- 
ing currency  enjoyed  by  State  banks  in  1860  had  continued  until  to-day, 
would  probably  be  as  follows : 


State. 

Population 
in  1897. 

Actual  loss  in 
amount  of  hank- 
ing funds  in  1897, 
at  the  per  capita 
of  1860. 

Natural  in- 
crease, with 
slaves  free, 
should  show 
one-quarter 
more. 

Total. 

Alabama 

Kentucky 

Missouri  

North  Carolina  . 
South  Carolina  . 
Tennessee 

1,  675,  000 
2, 090,  000 

1,  887, 000 
992, 000 

2,  427,  000 
1,  780,  000 
1,  280,  000 
1,  924,  000 
1,  768,  000 

$18, 396,  500 

48,  864,  200 
27,  946, 470 
75,  233, 280 
29, 026,  920 
15,895,400 

49,  830,  400 
3,  559,  400 

15, 191,  760 

$7,  478,  875 
14, 933, 050 
13, 067.  475 

4,  054, 303 
10, 348, 819 

6, 144,  560 
13,916,  160 

7,  767, 188 

9,  282,  000 

$25,  872, 375 
63,  797,  250 
41,013,915 
79,  287.  584 
39,375,739 
22,  o:;i>.  960 

63,  746,560 
11.326,588 
24,473,760 

Total 

15,  823,  000 

283,  944,  330 

86,  992,  431 

370,  933,  761 

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STRENGTHENING    THE    PUBLIC    CREDIT,   ETC. 


237 


Fifteen  States  in  ichich  h<nihi>i<i  iras  )tn<lcrth>j>r<l  in  isfi0fand  in  which 
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States. 

Population, 
1897. 

States. 

Population, 
1897. 

Arkansas 

1, 360, 000 

1, 155,  000 

517, 000 

496, 000 

151,  000 

1, 342,  000 

1,444,000 

225, 000 

1, 145.  000 

Nevada  

45,000 

California 

South  Dakota 

Texas 

387  ooo 

Colorado 

2,698,000 

I  tali 

272.0(H) 

Idaho  

Washington 

Wyoming 

4G8  000 

86,0iio 

Mississinni 

Total  population  . 

Montana 

11.  791.000 

Nebraska 

Estimated  deficiency  in  banking  funds  in  these   fifteen 

States,  as  shown  to  be  in  the  nine  States,  in  1897 $211,  530,  5  lo 

Deficiency  in  nine  States  above 283,  944.  330 


Total  deficiency  in  24  States 495,471.  870 


Number  and  value  of  slaves  in  1860  {average  value  estimated  at  $500  per 

head)  in  the  nine  States  following. 


State. 

Number  of 

slaves  in 

1800. 

Value  at  $500 
per  bead. 

Assessed  value 
of  personal 

property  ml" 

Assessed  value 

of  personal 
property  in  1890.9 

Alabama 

Georgia 

435,  080 
111,115 

$217,540,000 
55.557.  Rftn 

$277,164,673 
438.  430  940 

$104,273,091 

inn  77.1  nan 

Louisiana 

Missouri 

North  ( 'arolina. .  . 
South  Carolina. . . 

Tennessee 

Virginia  

225,483     112,741,500 
331,726     165,863,000 
114,931       57,465,500 
331.05'.)      L65,529,500 
402,406     201,203,000 
275,71!)      137,850.500 
490,865     245,432,500 

250,  2S7,  639      170,807,996 
155,082,277       7  1.  700,905 
113,485,274     288,  116,597 
175,0.">  1,020       93,231,  7  12 
359,546,444       78,219,946 
162,504,020       89,887,380 
239,069,  los     208,700,236 

Total 

2,  718, 3S4 1, 359, 192,  000 2, 171,  501 ,  4 lo  1 .  298,  711, 923 

Census  1860,  p.  294,  Mortality  and  Miscellaneous  Statistics. 
'Census  1890,  part  2,  Wealth,  Debt,  and  Taxation,  p.  102. 


238  STRENGTHENING    THE    PUBLIC    CREDIT,    ETC. 

Personal  property  per  capita  in  1860,  deducting  value  of  slaves.   $85.  78 
Personal  property  per  capita  in  1890,  slaves  free 85.  44 

Population  in  1860,  9,469,634.     Population  in  1890,  15,199,370. 

Total  capital,  surplus,  and  undivided  profits  in  places 

under  10,000  population $253.  284, 959 

Circulation 70, 427,  647 

Deposits 411,  476,  864 

Total  banking  funds 735, 189,  470 

Capital  actually  paid  in 180, 340, 570 

Population  in  places  under  10,000 41, 840,  776 

Deduct  people  served  by  banks  in  cities  of  10,000  popu- 
lation or  more 10,  300,  737 

31,  450,  039 

National  banking  funds  per  capita,  to  serve  people  living  in  places  of 
less  than  10,000  population,  $23.33. 

Total  capital  surplus  and  undivided  profits  in  cities  of 

10,000  population  or  more $712, 955, 136 

Circulation 128, 493,  023 

Deposits 1, 441, 872, 264 

Total  national  banking  funds 2,  283, 320,  423 

Capital  actually  paid  in  in  cities  of  10,000  population  or 

more 451, 147,  525 

Population  in  cities  of  10,000  and  over 20,  781,  474 

One-half  as  many  again  served  by  banks  in  above  cities .         10,  390,  737 

Probable  population  served  by  such  banks  31, 172,  211 

Banking  funds  per  capita  for  cities  of  10,000  inhabitants  or  over, 
$73.25. 


CLEARING  HOUSE  OF  WORCESTER,  MASS. 
CONSTITUTION. 

The  banks  in  the  city  of  Worcester,  having  associated  on  March  5, 
1861,  for  the  purpose  of  effecting  a  more  perfect  and  satisfactory  set- 
tlement of  the  daily  balances  between  them,  deeming  it  advisable  to 
adopt  a  more  permanent  and  formal  organization,  hereby  agree  upon 
the  following 

ARTICLES   OF  ASSOCIATION. 

Section  1.  The  name  of  the  association  shall  be  the  Worcester 
Clearing  ITouse. 

Sec.  2.  The  objects  of  the  association  are  the  effecting,  at  one  place 
and  one  time,  of  the  daily  exchanges  between  the  several  associated 
banks,  and  the  payment,  at  the  same  time  and  place,  of  the  balances 
resulting  from  such  exchanges;  the  promotion  of  a  general  uniformity 


STRENGTHENING    THE    PUBLIC    CBEDIT,  ETC.  239 

of  action  among  the  banks;    and   the  cultivation  of    honorable  and 
friendly  relations  among  the  members. 

Seo.  3.  Bach  bank  belonging  to  the  association  may  be  represented 
by  its  president  and  cashier,  both  of  whom  shall  be  entitled  to  vol. 
the  members  of  the  association,  at  all  meetings  thereof. 

Sec.  4.  The  annual  meeting  shall  be  held  at  the  clearing  house  on 
the  second  Monday  in  October,  in  each  year,  when  a  chairman  and 
secretary  shall  be  chosen,  by  ballot,  who  shall  hold  their  offices  for  one 
year,  and  until  others  are  chosen  in  their  stead;  and  whenever,  at  any 
meeting,  either  of  them  shall  be  absent,  a  chairman  or  secretary  pro 
tempore  shall  be  chosen. 

Sec.  5.  At  every  annual  meeting  there  shall  also  be  chosen,  by  bal- 
lot, a  standing  committee  of  three  (not  more  than  one  member  of  the 
committee  from  any  one  bank),  to  be  called  the  clearing  house  com- 
mittee, who  shall  hold  their  offices  for  one  year,  and  until  others  are 
chosen  in  their  stead,  whose  duty  it  shall  be  to  procure  suitable  accom- 
modations for  the  clearing;  to  provide  proper  books,  stationery,  and 
whatever  else  may  be  necessary  for  the  convenient  transaction  of  the 
business;  to  ascertain  and  advise  the  banks  as  to  their  duties  and  lia- 
bilities in  case  of  any  doubtful  construction  of  the  State  or  United 
States  laws  relating  to  banks  and  banking;  to  investigate  and  report 
to  the  association  upon  any  matters  affecting  the  banking  interests, 
ami,  generally,  to  supervise  the  whole  business  and  interests  of  the 
association.  Any  vacancies  which  may  occur  in  the  committee  duii 
the  year  may  be  tilled  at  any  meeting  of  the  association. 

Sec.  6.  The  cashier  of  the  clearing  bank  shall  be  the  manager  of  the 
clearing,  and  the  settling  clerks  shall  be  under  his  direction  while  at 
the  clearing  house.  The  hour  for  making  the  exchanges  shall  be  at  IL' 
o'clock  m.  Errors  in  the  exchanges  and  claims  arising  from  the  returns 
of  checks  or  other  cause,  are  to  be  adjusted  directly  between  the  banks 
which  are  parties  therein  and  not  through  the  clearing  house. 

Sec.  7.  Each  bank  belonging  to  the  association  shall  deposit  with 
the  clearing  house  committee  its  proportion  of  a  clearing  fund.  The 
proportionate  deposit  of  each  bank  shall  be  decided  by  vote  of  the  asso- 
ciation. The  clearing  fund  shall  be  deposited  with  the  clearing  bank, 
free  of  interest,  as  a  compensation  for  services  rendered,  and  for  the 
payment  of  all  necessary  expenditures  of  the  association.  On  making 
its  deposit  each  bank  shall  receive  a  certificate  therefor,  signed  by  I 
clearing  house  committee  and  countersigned  by  the  manager.  No  bank 
shall  make  the  clearings  of  a  bank  which  is  not  a  member  of  the  asso- 
ciation. 

Sec.  8.  No  new  bank  shall  be  admitted  to  the  association  excepting 
on  the  recommendation  of  the  clearing-house  committee  and  by  a  vote 
of  three-fourths  of  the  members;  and  no  bank  shall  withdraw  without 
giving  six  months'  notice  of  such  intention  to  the  manager  of  the 
clearing  house. 

Sec.  9.  Eor  cause  deemed  sufficient  by  the  associated  banks,  at  any 
meeting  thereof,  any  bank  may  be  expelled  from  the  association  and 
debarred  from  all  the  privileges  of  the  clearing  house  by  a  vote  of 
three-fourths  of  the  members. 

Sec.  10.  These  articles  of  association  shall  be  signed  by  the  members 
thereof  and  by  new  members  hereafter  admitted ;  they  may  be  amended 
by  a  vote  of  two-thirds  of  the  members  at  any  meeting  of  the  associa- 
tion, provided  that  notice  of  the  proposed  amendment  shall  have 
been  given  in  writing  at  a  previous  meeting  and  lodged  with  the 
secretary. 

Sec.  11.  The  secretary  shall  notify  all  meetings   by  giving   notice 


240       STRENGTHENING  THE  PUBLIC  CREEIT,  ETC. 

in  writing  to  each  of  the  associated  banks;  and  be  sball  convene  the 
association  whenever  requested  to  do  so  by  any  member. 

Note. — Population,  115,000;  capital  of  clearing  house,  $10,500; 
banks  of  $250,000  capital  or  less  loan  the  clearing  house  $1,000;  those 
having  over  $250,000  capital  loan  the  clearing  house  $1,500  free  of 
interest. 


H.  E.  10339.— FIFTY-FIFTH  CONGRESS,  SECOND  SESSION. 

IN  THE   HOUSE   OF  REPRESENTATIVES, 

May  16,  1898. — J/r.  Walker,  of  Massachusetts,  introduced  the  following 
bill;  which  ivas  referred  to  the  Committee  on  Banking  and  Currency 
and  ordered  to  be  printed. 

A  BILL  To  so  change  the  national-hank  act  as  to  secureto  the  people  in  all  sections 
of  the  country  an  equal  opportunity  to  freely  use  paper  money. 

Be  it  enacted  by  the  Senate  and  House  of  Fepresentatives  of  the  United 
States  of  America  in  Congress  assembled,  That  hereafter  banking  associ- 
ations shall  not  be  required,  "preliminary  to  the  commencing  of  the 
banking  business,"  or  in  continuance  thereof,  to  "transfer  and  deliver 
to  the  Treasurer  of  the  United  States,"  or  as  security  for  circulating 
notes,  any  United  States  bonds;  and  any  national  banking  association 
that  has  transferred  and  delivered  such  bonds  to  the  Treasurer  may 
recover  such  bonds  from  the  Treasurer  upon  complying  with  the  con- 
ditions prescribed  for  the  reassignment  of  such  bonds  to  associations  in 
liquid  :tion;  and  the  Treasurer  of  the  United  States  is  hereby  author- 
ized and  directed  to  reassign  and  deliver  such  bonds  to  the  association 
from  which  he  received  them  upon  being  notified  by  the  Comptroller  of 
the  Currency  that  such  association  is  in  compliance  with  this  section  of 
this  Act. 

Sec.  2.  That  any  banking  association  organized  under  the  laws  of 
any  State  that  shall  place  on  deposit  in  any  banking  association  in  the 
largest  commercial  city  in  the  State  in  which  the  association  is  located, 
or  in  any  other  place  acceptable  to  the  Comptroller  of  the  Currency,  an 
amount  of  specie  equal  to  five  per  centum  of  its  circulating  notes  that 
it  averages  to  have  in  actual  circulation  for  the  redemption  on  demand 
of  such  notes,  and  shall  also  have  in  its  own  vaults,  in  addition  to  the 
amount  hereinbefore  mentioned,  an  amount  of  specie  equal  to  five  per 
centum  of  its  average  individual  deposits,  thereupon  the  imposition  and 
the  collection  of  the  ten  per  centum  tax  on  the  circulating  notes  of 
banking  associations  organized  under  the  laws  of  any  State  shall  be 
suspended,  so  far  as  they  relate  to  such  banking  association:  Provided, 
however,  That  in  case  such  banking  association  fails  to  keep  good,  as 
averaged  for  any  month,  any  part  of  the  total  amount  of  specie  as  is 
herein  required  it  shall  be  liable  to  and  shall  pay  into  the  Treasury  of 
the  United  States  a  tax  equal  to  ten  per  centum  per  annum  on  an 
amount  equal  to  the  amount  of  the  average  deficit  in  such  fund  or  funds 
for  such  month. 

Sec.  3.  That  whenever  any  association  fails  to  pay  on  demand  in 
specie  the  circulating  notes  signed  by  its  officers  and  paid  out  by  it,  it 
shall  be  subject  to  and  shall  pay  a  duty  at  the  rate  of  two  per  centum 
per  annum,  one-half  on  July  first  and  one-half  on  October  first,  on  a 
sum  equal  to  the  average  amount  of  its  circulating  notes  outstanding 
and  of  the  individual  deposits  in  such  association  during  such  failure 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  241 

and  until  audi  payment  is  resumed:  Provided,  "however,  That  in  case 
any  such  association  pays  one  half  of  the  tax  herein  imposed  on  or 
before  the  day  it  is  due  and  payable,  the  other  half  shall  be,  and  is 
hereby,  remitted. 

Sec.  4.  That  each  association  shall  keep  such  records  and  send  to 
the  Comptroller  of  the  Currency  such  reports  and  submit  to  such 
examinations  by  any  agent  of  the  Comptroller,  to  ascertain  whether 
the  association  is  in  compliance  with  law  and  the  amount  of  tax  due 
and  payable  by  it.  as  the  Comptroller  of  the  Currency  shall  from  time 
to  time  direct,  and  the  expenses  of  such  examination  shall  be  paid  by 
such  association. 


H.  E.  10333.— FIFTY-FIFTH  CONGRESS,  SECOND  SESSION. 

IN   THE   HOUSE   OF  REPRESENTATIVES. 

May  13,  1898. — Mr.  Walker,  of  Massachusetts,  introduced  the  following 
bill;  ichich  teas  referred  to  the  Committee  on  Banking  and  Currency 
and  ordered  to  be  printed. 

A  BILL  To  so  change  the  national-bank  Act  as  to  secure  to  the  people  in  all  sections 
of  the  country  an  equal  opportunity  to  freely  use  paper  money. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United 
States  of  America  in  Congress  assembled,  That  hereafter  banking  asso- 
ciations shall  not  be  required,  "preliminary  to  the  commencing  of  the 
banking  business,"  or  in  continuance  thereof,  to  "transfer  and  deliver 
to  the  Treasurer  of  the  United  States,"  or  as  security  for  circulating 
notes,  any  United  States  bonds:  and  any  national  banking  association 
that  has  transferred  and  delivered  such  bonds  to  the  Treasurer,  upon 
depositing  lawful  money,  in  compliance  with  section  two  of  this  Act, 
may  recover  such  bonds  from  the  Treasurer  upon  complying  with  the 
conditions  prescribed  for  the  reassignment  of  such  bonds  to  associations 
in  liquidation ;  and  the  Treasurer  of  the  United  States  is  hereby 
authorized  and  directed  to  reassign  and  deliver  such  bonds  to  the  asso- 
ciation from  which  he  received  them  upon  being  notilied  by  the  Comp- 
troller of  the  Currency  that  such  association  is  in  compliance  with 
section  two  of  this  Act;  and  in  place  of  United  States  bonds,  as  hereto- 
fore required,  banking  associations  shall  deposit  lawful  money  in 
amount  sufficient  to  takeout  the  United  States  legal  tender  circulating 
notes  described  in  section  two;  and  the  taking  out  of  such  notes  is 
hereby  required  of  such  associations  preliminary  to  the  commencing 
of  the  banking  business. 

In  places  of  less  than  four  thousand  inhabitants,  with  the  permission 
of  the  Compt roller  of  the  Currency,  banking  associations  may  be 
organized  with  a  paid-up  capital  of  not  less  than  twenty-live  thousand 
dollars. 

The  word  capital  as  used  in  this  Act  shall  be  held  to  mean  the  sum 
of  the  nominal  capital  plus  the  surplus  and  undivided  profits  of  asso- 
ciations, and  as  shown  by  the  last  published  annual  report  of  the  <  Vmp- 
troller  of  the  Currency  when  such  items  concerning  the  bank  in  question 
are  published  in  such  report. 

SEO.  2.  That  upon  the  delivery  of  coin,  coin  certificates,  or  United 
States  legal-tender  notes,  including  Treasury  notes,  to  the  Treasurer  of 
the  United  Stales  in  sums  of  one  hundred  dollars  or  any  multiple 
thereof,  and  in  amount  equal  as  near  as  may  be  to  twelve  and  one-half 

B  &z  C 1G 


"242  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

per  centum  of  its  capital,  thereupon  it  shall  be  entitled  to  receive  from 
the  Comptroller  of  the  Currency  United  States  legal-tender  notes  of 
different  denominations,  having  printed  on  their  reverse  side  the  cir- 
culating note  of  the  association,  in  blank,  registered  and  countersigned 
as  provided  by  law,  equal  in  amount  to  the  coin,  coin  certificates,  and 
United  States  legal-tender  notes,  including  Treasury  notes,  delivered; 
and  any  association  may  at  any  time  increase  such  delivery  of  such 
moneys  to  an  amount  equal  to  one-half  of  its  capital,  and  receive  such 
circulating  notes  thereon  to  the  amount  of  such  delivery  of  such  money. 

The  promise  of  the  association  receiving  and  issuing  such  notes  to 
pay  the  same  on  demand  shall  be  attested  by  the  signature  of  the  presi- 
dent or  vice-president  and  cashier  or  assistant  cashier  before  being 
issued  by  it. 

The  Secretary  of  the  Treasury  is  hereby  authorized  to  issue  United 
States  legal-tender  notes  of  the  Act  of  March  third,  eighteen  hundred 
and  sixty-three,  to  the  amount  necessary  to  carry  into  effect  the  provi- 
sions of  this  Act. 

The  lawful  name  and  description  of  the  notes  issued  under  this  sec- 
tion shall  be  greenbacks. 

Sec.  3.  That  the  Comptroller  of  the  Currency  shall  issue,  in  blank, 
circulating  notes  of  different  denominations,  to  any  association,  and  the 
association  may  issue  the  same  in  addition  to  the  greenbacks  described 
in  the  preceding  section  equal  in  amount  to  the  amount  of  the  green- 
backs taken  out  by  it  until  the  setting  aside  of  the  gold  in  the  Treasury 
of  the  United  States  to  redeem  certain  legal  tender  notes  as  described 
in  the  section  next  succeeding.  Thereafter  he  shall  issue  to  any  asso- 
ciation, and  the  association  may  retain  and  issue,  the  notes  described 
in  this  section  at  his  discretion,  but  not  less  in  amount  than  the  amount 
of  the  greenbacks  taken  out  by  such  association,  and  not  less  in  amount 
than  twenty-five  per  centum  in  excess  of  the  amount  upon  which  a  tax 
was  assessed  and  paid  in  the  two  years  next  preceding,  and  not  to 
exceed  in  amount  the  amount  of  its  unimpaired  capital.  Each  associa- 
tion taking  out  the  notes  described  in  this  section  shall  add  to  its  cur- 
rent redemption  fund  and  keep  therein  a  sum  in  lawful  money  equal  in 
amount  to  five  per  centum  of  such  notes  it  averages  to  keep  in  circula- 
tion as  found  from  time  to  time;  such  five  per  centum,  together  with 
the  five  per  centum  mentioned  in  the  next  section,  shall  be  held  for  the 
redemption  of  its  greenbacks  and  notes  issued  to  it  under  this  section. 

That  the  lawful  name  and  description  of  notes  issued  under  this  sec- 
tion shall  be  currency.*     All  currency  shall  have  printed  on  its  reverse 

*  ISet  assets  of  national  and  State  banks,  in  capital, 

surplus,  and  undivided  profits $1, 350,  000,  000 

All  kinds  of  paper  money  in  circulation 1, 095, 377,  992 

Profits  to  bank  on  currency  under  existing  law  and  conditions,  about 
one  fourth  of  1  per  cent. 

Asalltaxesexceptone-fifthof  1  percent,  safety  fund  tax,  are  removed, 
the  average  profit,  taking  the  country  over,  under  this  bill,  on  the  cur- 
rency kept  out,  would  be  about  0  per  cent.  Nothing  is  gained  on  the 
greenbacks  and  6  per  cent  on  the  reserve  notes. 

The  currency  issued  is  not  "reserve  certificates."  It  is  in  no  sense 
"issued  against  the  reserve  held."  They  hold  exactly  the  same  relation 
to  the  "reserve  held"  as  any  other  liability  of  the  banks.  For  each 
$95  of  old  issue  of  greenbacks  that  are  redeemed  and  destroyed,  $100 
of  new  greenbacks  are  issued  and  $100  of  currency,  making  $200  of 
currency  for  each  $95  retired. 


STRENGTHENING    THE    PUBLIC    CREDIT,  ETC.  243 

side  the  statement  that  it  is  to  be  finally  redeemed  and  paid  by  the 
Treasurer  of  the  United  States.  The  Comptroller  of  the  Currency  may 
cause  a  supply  of  currency  and  of  greenbacks  to  be  printed  for  associa- 
tions in  anticipation  of  immediate  delivery  to  them. 

Sec.  4.  That  the  Treasurer  of  the  United  States  shall  forthwith 
redeem  and  destroy  existing  United  States  legal-tender  notes  issued 
under  Acts  passed  before  July  first,  eighteen  hundred  and  ninety,  and 
put  in  circulation  previous  to  the  passage  of  this  Act,  in  such  manner 
as  he  may  deem  proper,  equal  in  amount  to  ninety-five  per  centum  of 
the  aggregate  of  the  coin,  coin  certificates,  and  United  States  legal- 
tender  notes,  including  Treasury  notes,  received  for  greenbacks  issued 
to  banking  associations;  and  the  Treasurer  shall  set  aside  five  per 
centum  of  such  aggregate,  which,  together  with  the  five  per  centum 
mentioned  in  the  previous  section,  shall  be  held  for  the  current  redemp- 
tion of  the  greenbacks  and  currency  of  the  association  making  such 
deposit. 

When  there  shall  be  no  more  in  amount  of  United  States  legal-tender 
notes  outstanding  issued  before  July  first,  eighteen  hundred  and  ninety, 
than  the  amount  of  the  gold  then  held  by  the  Treasurer  that  may  be 
used  for  the  redemption  of  such  notes,  the  gold  so  held  shall  then  be 
set  aside  by  the  Treasurer  of  the  United  States  and  used  only  to  redeem 
such  notes,  which  notes  upon  being  so  redeemed  shall  be  destroyed;* 
and  from  and  after  thirty  days  from  the  setting  aside  of  gold  herein 
mentioned  such  notes  shall  not  be  used  by  any  banking  association  in 
redeeming  its  notes,  or  be  counted  in  the  reserve  fund  of  any  national 
banking  association,  or  be  a  legal  tender  for  any  debt  due  and  payable 
in  the  United  States  excepting  for  duties  due  and  payable  on  goods 
imported  into  the  United  States.! 

That  upon  the  setting  aside  of  the  gold  herein  directed,  a  sum  of 
money  equal  in  amount  to  all  moneys  subsequently  paid  into  the  Treas- 
ury of  the  United  States  in  exchange  for  greenbacks  shall  be  held  in 
the  Treasury  as  a  separate  fund,  out  of  which  the  Treasurer  shall,  from 
time  to  time,  redeem  greenbacks  held  by  certain  associations  in  amount 
aud  manner  as  follows,  to  wit: 

When  such  funds  shall  amount  to  one  per  centum  of  the  total  amount 
of  greenbacks  taken  out  under  this  Act  by  associations  before  the  set- 
outstanding  United  States  legal-tender  notes $340, 000,  000 

Gold  redemption  fund  in  Treasury  in  February,  1806. . .     140.  000,  000 

Total  legal-tender  notes  to  be  assumed  by  banks  . .     200,000,000 

to  relieve  the  situation.  Thus,  when  the  banks  have  assumed  the  cur- 
rent redemption  of  only  $200,000,000  of  legal-tender  notes,  the  Treasury 
will  be  wholly  relieved  from  paying  gold  on  any  form  of  paper  money, 
and  it  will  be  a  matter  of  as  much  indifference  what  the  Government 
pays  out  as  in  the  case  of  any  private  citizen. 

Visible  gold  on  January  1,  1899: 

In  United  States  Treasury $240,  973,  <>•»" 

In  national  banks 266,  464,000 

In  State  banks,  trust  companies,  etc.  (estimated) 266,  <>00, 000 

Total  commercial  gold 779.  437,  000 

tThis  provision  is  designed  to  bring  legal-tender  notes  into  the 
Treasury  for  redemption. 


244       STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 

ting  aside  of  gold  and  then  held  by  them,  or  oftener,  he  shall  call  in, 
redeem,  and  cancel  such  greenbacks  so  held  that  are  in  excess  of  the 
total  amount  of  such  notes  issued  to  banking  associations  and  held  by 
them,  previous  to  the  setting  aside  of  gold,  and  in  amounts  of  one  hun- 
dred dollars  or  any  multiple  thereof.  He  shall  first  reduce  the  amount 
of  such  greenbacks  to  those  associations  which  hold  the  largest  amount 
of  greenbacks  in  proportion  to  their  capital,  if  requested  by  them  so  to 
do,  and  until  the  holdings  of  such  greenbacks  by  all  associations  have 
been  reduced  to  the  sum  required  to  be  taken  out  by  them;  and  he 
may  require  any  association  to  increase  its  holdings  of  greenbacks  in 
sums  of  one  hundred  dollars  or  any  multiple  thereof  when  the  increase 
of  its  capital  makes  its  holdings  of  greenbacks  less  in  percentage  than 
is  required  by  this  Act.  Thereafter  the  taking  out  and  the  holdings  of 
greenbacks  by  any  association  shall  be  reduced  so  as  to  keep  the  total 
amount  of  greenbacks  held  by  the  aggregate  of  all  associations  as  near 
as  may  be  at  the  aggregate  amount  of  greenbacks  so  held  by  all  asso- 
ciations at  the  time  of  the  setting  aside  of  gold  herein  mentioned. 

Two  years  from  the  day  of  the  setting  aside  of  the  gold  in  the  Treas- 
ury to  redeem  certain  legal-tender  notes  any  gold  so  set  aside  then 
remaining  shall  be  free  money  in  the  Treasury. 

Sec.  5.  That  upon  the  expiration  of  the  corporate  term  of  any  asso- 
ciation, if  its  corporate  existence  is  not  extended  by  the  Comptroller 
of  the  Currency,  or  upon  the  insolvency  of  an  association,  or  by  the 
order  or  with  the  consent  of  the  Comptroller,  approved  by  the  Secre- 
tary of  the  Treasury,  the  Treasurer  shall  redeem  the  greenbacks  issued 
to  the  association,  out  of  any  moneys  in  the  Treasury  not  otherwise 
appropriated. 

Any  association  may  reduce  its  currency  by  surrendering  it  for  de- 
struction to  the  Comptroller  of  the  Currency,  who  shall  destroy  the 
currency  so  surrendered  in  the  manner  prescribed  by  law.  The  liabil- 
ity of  any  association  for  its  currency  shall  neither  be  canceled  nor 
reduced  in  any  other  manner. 

Sec.  6.  That  each  association  shall  keep  good  with  the  Treasurer  of 
the  United  States  and  he  shall  at  all  times  keep  and  have  on  deposit 
in  the  Treasury  of  the  United  States,  in  lawful  money,  except  as  here- 
inafter provided,  for  the  current  redemption  fund  of  each  association 
during  its  solvency,  a  sum  equal  to  the  five  per  centum  before  men- 
tioned of  the  greenbacks  and  average  outstanding  currency  of  the  asso- 
ciation, to  be  held  and  used  for  the  current  redemption  of  its  green- 
backs and  currency;  and  no  part  of  such  redemption  fund  shall  be 
counted  as  a  part  of  the  reserve  of  any  bank ;  and  when  the  notes  of 
any  association,  assorted  or  unassorted,  shall  be  presented  for  such 
redemption  to  the  Treasurer  of  the  United  States,  in  sums  of  five  hun- 
dred dollars,  or  any  multiple  thereof,  or  in  sums  equaling  not  less  than 
one  per  centum  of  the  total  circulation  of  any  association  having  less 
than  fifty  thousand  dollars  in  greenbacks  and  currency,  the  same  shall 
be  redeemed. 

Eacli  association  shall  redeem  in  lawful  money  its  greenbacks  and 
currency  at  its  own  banking  house  and  at  an  agency  approved  by  the 
Comptroller  in  some  reserve  city. 

The  right  to  confer  the  duties  and  responsibilities  of  executing  the 
provisions  of  this  Act,  or  any  part  thereof,  relating  to  the  current 
redemption  fund  or  the  redemption  of  greenbacks  and  currency  upou 
any  reserve  bank  or  other  suitable  agent,  under  such  regulations  as  he 
may  deem  safe  and  proper,  and  to  deposit  any  part  of  the  current 
redemption  fund  or  funds  in  any  place  he  may  deem  proper,  with  the 
approval  of  the  Secretary  of  the  Treasury,  is  hereby  conferred  upon  the 
Treasurer  of  the  United  States. 


STRENGTHENING    THE    PUBLIC    CREDIT,   ETC.  245 


Sec.  7.  That  from  and  after  thirty  days  from  the  netting  aside  of  gold 
by  the  Treasurer  of  the,  United  states  to  redeem  and  cancel  certain 
legal-tender  notes  as  aforesaid  the  cash  reserve  required  by  law  to  be 
kept  by  banking  associations  shall  be  kept  as  near  as  may  be  in  equal 
parts  in  greenbacks  of  other  associations  in  silver  coin  and  in  gold  coin 
of  the  United  States. 

Each  banking  association  may  keep  its  coin  and  its  bonds  in  such 
place  and  under  such  circumstances  as  the  Comptroller  of  the  I  Surrency 
may  approve,  but  the  gold  coin  required  to  be  kept  in  the  cash  reserve 
by  each  association  shall  be  kept  in  a  clearing  house  organized  under 
this  act. 

Any  association  that  fails  to  so  keep,  use,  and  pay  out  its  silver  coin, 
gold  coin,  greenbacks,  and  currency  as  to  keep  each  one  and  all  four 
kinds  of  money  at  a  parity  each  with  all  the  others  from  and  after  the 
setting  aside  of  gold  herein  mentioned  shall  be  deemed  to  ha  ve  failed  to 
pay  on  demand  in  coin  or  in  United  States  legal- tender  notes  issued 
to  other  associations  its  greenbacks  and  currency. 

No  association  shall  plead  in  defense,  in  any  action  brought  against 
it,  that  any  greenback  or  currency  note  signed  by  its  officers  and  paid 
out  by  it  is  a  United  States  legal-tender  note. 

Sec.  8.  That  hereafter  no  certificates  shall  be  issued  or  reissued  by 
the  Treasury  of  the  United  States  upon  the  deposit  of  gold  coin,  silver 
coin,  or  any  other  money,  and  that  all  existing  coin  certificates  and 
money  certificates  shall  be  canceled  and  destroyed  upon  being  received 
into  the  Treasury,  and  the  coin  or  money  remaining  upon  which  they 
were  issued  shall  be  free  coin  or  money  in  the  Treasury;  and  no  circu- 
lating note  authorized  under  existing  law  shall  be  issued  or  reissued  to 
any  banking  association  of  a  less  denomination  than  three  dollars,*  and 
all  such  notes  of  less  denomination  than  three  dollars  hereafter  received 
for  redemption  shall  be  canceled  when  received  in  the  Treasury,  and 
like  notes  in  blank  of  a  larger  denomination  shall  be  returned  in  place 
of  them;  and  no  United  States  legal  tender  notes,  including  Treasury 
notes,  of  a  less  denomination  than  three  dollars  shall  be  hereafter 
issued  or  reissued,  but  those  of  a  larger  denomination  shall  be  issued 
or  reissued  in  place  of  them. 

Sec.  0.  That  there  is  hereby  constituted  and  appointed  a  board  of 
advisers  to  the  Comptroller  of  the  Currency,  consisting  of  seven  experts, 
to  consult  and  advise  with  the  Comptroller  upon  methods  of  executing 
existing  law  concerning  banking,  and  changes  desirable  therein,  over 
which  board  the  Comptroller  of  the  Currency  shall  preside, 

The  president  of  the  chief  reserve  bank  in  San  Francisco.  New. 
Orleans,  and  each  of  the  other  five  chief  reserve  cities  in  the  country, 
or  such  substitute  as  any  one  of  them  shall  from  time  to  time  appoint, 
shall  be  a  member  of  the  board  of  advisers,  which  board  shall  meet 
once  a  year,  or  oftener  if  the  Comptroller  of  the  Currency  or  ;i  majority 
of  the  board  so  determines,  and  at  such  time  and  place  as  the  Comp- 
troller shall  appoint. 

The  recommendations  of  the  board  of  advisers,  or  a  synopsis  thereof) 
and  all  votes,  shall  be  entered  in  the  records  of  the  boat  d.  The  deci- 
sion of  the  Secretary  of  the  Treasury  from  time  to  time  as  to  what 

'Treasury  report,  February  28,  1898: 

$1  notes  in  ci renin t ion $107,730 

$2  notes  in  circulation 81,  1 1 1.  0(H) 

Total  outstanding  notes  under  $5 138, 874, 205 

$5  notes  in  circulation 273,971,710 


246  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

person  or  persons  are  entitled  to  act  as  members  of  the  board  of  advisers 
shall  be  final. 

Any  association  aggrieved  by  any  action  taken  in  its  case  by  the 
Comptroller  of  the  Currency  may  appeal  to  the  board  of  expert  advisers, 
and  the  decision  of  such  board  in  such  case  by  a  yea  and  nay  vote  if  no 
member  votes  in  the  negative,  or  when  approved  by  the  Secretary  of 
the  Treasury,  shall  be  final. 

Sec.  10.  That  any  five  or  more  national  banking  associations  are 
hereby  authorized  to  unite  in  forming  a  clearing-house  association.  Uy 
adopting  a  constitution  and  by-laws  not  inconsistent  with  the  provisions 
of  this  Act,  the  banking  associations  uniting  to  do  so  and  certifying  to 
the  Comptroller  of  the  Currency  that  fact  shall  in  that  act  become  a 
clearing-house  association  body  corporate,  upon  such  constitution  and 
by-laws  being  approved  in  writing  by  the  Comptroller  of  the  Currency. 

An  incorporated  banking  association  may  be  admitted  to  membership 
in  any  clearing-house  association  incorporated  under  this  Act;  and  the 
membership  of  any  banking  association  of  such  clearing-house  associa- 
tion may  be  terminated  by  any  action  of  the  clearing-house  association 
approved  by  the  Comptroller  of  the  Currency. 

Any  banking  association  may  withdraw  from  any  clearing-house 
association  and  any  clearing-house  association  may  withdraw  from  the 
national  clearing-house  association  upon  such  conditions  as  the  Comp- 
troller of  the  Treasury  may  approve. 

Each  member  of  such  clearing-house  association  shall  share  in  its  fees 
and  other  income,  and  in  its  assessments,  expenses,  and  losses  in  the 
proportion  that  the  amount  of  its  capital  bears  to  the  total  amount  of 
all  the  capital  of  all  the  associations  composing  the  clearing-house 
association  and  as  shown  by  the  annual  report  of  the  Comptroller  of 
the  Currency  last  made  previous  to  the  apportionment  of  the  same, 
when  the  items  of  its  capital  are  given  in  such  report. 

Each  clearing-house  association  may  make  sales  or  loans  to  or  buy  or 
borrow  from  other  clearing-house  associations,  and  banking  associa- 
tions may  make  sales  or  loans  to  or  buy  or  borrow  from  clearing-house 
associations.  In  all  such  buying,  selling,  loaning  and  borrowing  clearing- 
house and  banking  associations  shall  be  exempt  from  the  usury  laws 
of  the  States  in  which  they  are  located. 

Any  clearing-house  association  organized  under  this  Act  may  estab- 
lish a  department  tor  the  clearing  of  the  greenbacks  and  currency  of 
banking  associations  in  the  current  redemption  thereof. 

Any  changes  in  the  constitution  or  by-laws  of  any  clearing-house 
association,  to  become  vali'i,  must  be  consistent  with  this  Act  and  must 
be  approved  in  writing  by  the  Comptroller  of  the  Currency,  and  the 
Comptroller  may  annul  any  part  of  the  same  at  any  time  after  a  hearing 
thereon,  with  the  concurrence  of  a  majority  of  the  board  of  advisers. 

Five  or  more  clearing-house  associations  organized  under  this  Act 
may  form  a  national  clearing-house  association  and  any  clearing  house 
organized  under  this  Act  may  be  admitted  to  and  remain  a  member  of 
the  national  clearing- house  association  upon  the  same  terms  and  condi- 
tions as  those  governing  in  the  case  of  associations  constituting  clearing- 
house associations  composed  of  banking  associations,  and  the  persons 
who  constitute  the  board  of  advisers  to  the  Comptroller  of  the  Currency 
provided  for  in  section  nine  of  this  Act,  shall  constitute  the  board  of 
directors  of  the  national  clearing-house  association:  Provided,  however, 
That  national  clearing  house  associations  may  make  sales  or  loans  to 
and  may  buy  or  borrow  from  clearing-house  associations  and  may  buy 
and  sell  such  bonds  as  are  necessary  or  desirable  to  the  conduct  of  its 


STRENGTHENING   THE    PUBLIC    CREDIT,   ETC.  247 

legitimate  business  to  any  amount  and  of  any  kind  approved  of  by  the 
Comptroller  of  the  Currency,  and  may  provide  for  the  coin  redemption 
of  circulating  notes  of  banking  associations,  and  may  take  and  issue, 
under  the  provisions  of  this  Act,  the  greenbacks  described  in  this  Act, 
but  in  denominations  of  not  less  than  one  thousand  dollars.* 

Any  clearing-house  association  organized  under  this  Act  maybe  desig- 
nated by  the  Secretary  of  the  Treasury  as  a  depository  of  public  moneys, 
and  may  also  be  employed  as  a  financial  agent  of  the  Government. 

Any  clearing-house  or  banking  association  organized  under  this  Act 
may,  with  the  approval  of  the  Secretary  of  the  Treasury,  deliver  to  the 
Treasurer  of  the  United  States  or  to  any  assistant  treasurer  of  the 
United  Suites,  for  safe-keeping,  any  kind  of  money  or  bonds,  and 
receive  such  a  statement  of  the  fact  of  their  being  in  the  Treasury  of 
the  United  States  as  the  Secretary  of  the  Treasury  may  approve. 

Clearing-house  associations  shall  be  subject  to  like  examination  by 
national-bank  examiners  as  national-banking  associations,  and  shall 
make  such  reports  to  the  Comptroller  of  the  Currency  as  he  may 
request. 

The  meeting  together  of  any  persons  who  are  officers,  agents,  or 
employees  of  any  five  or  more  associations  in  any  one  or  more  phi 
once  in  ten  days  or  oftener  for  the  purpose  of  exchanging,  paying,  or 
in  any  other  way  satisfying  any  obligations  used  in  commerce  among 
the  several  States  by  any  two  or  more  of  such  associations,  shall  con- 
stitute such  associations  represented  in  such  meeting  a  clearing-house 
association  for  the  purpose  of  the  taxation  herein  imposed,  and  such 
associations  represented  shall  be  jointly  and  severally  liable  to  pay, 
and  shall  pay,  into  the  Treasury  of  the  United  States  a  tax  in  amount 
equal  to  one- fiftieth  of  one  per  centum  on  the  aggregate  amount  of  all 
such  exchanging,  paying,  or  in  any  way  satisfying  such  obligations,  at 
each  and  every  meeting  of  persons  acting  for  such  associations:  Pro- 
vided, however,  That  in  case  any  such  association  pays  one-half  of  the 
tax  herein  imposed  on  or  before  the  day  it  is  due  and  payable,  the  other 
half  shall  be,  and  is  hereby,  remitted:  And  provided  further,  That  the 
tax  herein  imposed  on  associations  herein  described  shall  be  wholly 
remitted  to  each  one  and  all  associations  that  are  members  of  clearing 
houses  incorporated"  under  this  Act. 

Sec.  11.  That  the  Comptroller  of  the  Currency  may  issue  to  the 
National  Clearing-House  Association  or  other  clearing-house  associa- 
tion organized  under  this  Act,  or  to  any  national  banking  association, 
greenbacks  to  any  amount  approved  of  in  writing  by  the  Secretary  of 
the  Treasury,  in  addition  to  the  amount  of  greenbacks  hereinbefore 

*  The  financial  and  banking  system  of  the  United  States,  as  of  every 
other  nation,  must  be  built  from  the  top  down,  having  a  great  national 
bank  with  myriads  of  branches,  as  are  those  of  Europe,  like  Europeau 
governments,  or  it  must  be  built  from  the  bottom  up.  The  independent 
individual  bank,  while  retaining  its  independence,  will  be  united  with 
all  other  banks  to  form  a  democratic  but  strong  and  symmetrical  Bys- 
tem,  as  our  institutions  are  built  up  from  the  individual.  There  is  no 
escape  from  it.  This  section  accomplishes  that  purpose.  It  makes  a. 
solid  union  of  all  the  banks  in  the  country  into  practically  one  bank, 
with  all  the  advantages  of  a  United  States  national  bank,  with  8,000 
branches,  now  State  and  national,  leaving  each  bank  as  tree  as  now 
and  with  none  of  the  disadvantages  of  a  United  States  national  bank. 
It  also  gives  to  every  country  bank  all  the  assistance  ami  support  it 
could  receive  were  it  a  branch  of  a  United  States  national  bank. 


248        STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 

authorized :  Provided,  That  the  association  applying  for  such  additional 
greenbacks  shall  deliver  to  the  Treasurer  of  the  United  States  or  to 
anj*  assistant  treasurer  bonds*  in  kind  and  amount  acceptable  to  the 
Secretary  of  the  Treasury,  as  security  for  such  greenbacks,  and  shall 
pay  interest  on  the  amount  of  such  greenbacks  so  issued  at  the  rate  of 
six  per  cent  per  annum,  such  interest  on  such  greenbacks  to  be  paid  at 
such  time  and  in  such  manner  as  the  Comptroller  of  the  Currency  may 
determine;  but  no  more  in  amount  than  ninety  per  cent  of  the  par 
value  of  any  bond  shall  be  issued  in  such  greenbacks,  and  no  bonds 
other  than  bonds  of  the  Uuited  States  shall  be  accepted  by  the  Secre- 
tary of  the  Treasury  as  security  when  there  are  three  hundred  millions 
or  more  of  United  States  bonds  outstanding. 

Any  association  depositing  bonds  and  receiving  greenbacks  secured 
thereby  may  withdraw  such  bonds  so  deposited,  after  thirty  days  from 
the  date  of  such  deposit,  upon  paying  the  accumulated  interest  on  the 
amount  of  greenbacks  issued  upon  the  deposits  of  such  bonds  and  up 
to  the  date  of  their  withdrawal,  and  in  addition  to  such  interest  shall 
deposit  with  the  Treasurer  greenbacks  or  other  lawful  money  to  an 
amount  equal  to  the  greenbacks  issued  to  the  association  as  security 
for  which  the  bonds  were  deposited;  but  no  more  than  five  per  centum 
of  the  greenbacks  issued  to  any  association  other  than  the  one  receiv- 
ing such  greenbacks  shall  be  accepted  as  a  deposit  for  the  withdrawal 
of  such  bonds. 

The  money  so  deposited  for  the  withdrawal  of  such  bonds  shall  be 
immediately  put  in  redemption,  and  the  money  received  for  it  shall 
be  kept  as  a  special  fund  with  which  to  redeem  the  amount  of  green- 
backs issued  to  the  association ;  and  such  greenbacks  shall  be  redeemed, 
and  when  redeemed  shall  be  destroyed  to  an  amount  equal  to  the  green- 
backs issued  to  the  association  for  the  security  of  which  the  bonds  here- 
inbefore mentioned  were  deposited. 

The  Secretary  of  the  Treasury  shall  publish  once  in  seven  days,  or 
oftener,  in  the  "Statement  of  the  condition  of  the  United  States  Treas- 
ury and  the  receipts  and  expenditures,"  a  list  of  the  securities  and  the 
amount  of  each  kind  accepted  by  him  to  secure  greenbacks  issued  or 
proposed  to  be  issued  upon  the  deposit  of  bonds,  or  of  bonds  to  secure 
any  deposits  of  money  made  in  any  association. 

Sec.  12.  That  in  order  to  enable  the  Secretary  of  the  Treasury  to 
carry  into  effect  the  provisions  of  the  Act  of  January  fourteenth,  eighteen 
hundred  and  seventy-five,  entitled  "An  Act  to  provide  for  the  resump- 
tion of  sj>ecie  payments,"  and  of  this  Act,  the  Secretary  of  the  Treasury 
is  hereby  authorized  to  issue  and  sell  from  time  to  time,  for  the  period, 
of  four  years,  bonds  as  described  in  the  Act  of  July  fourteenth,  eighteen 
hundred  and  seventy,  entitled  "An  Act  to  authorize  the  refunding  of 
the  national  debt,"  such  bonds  to  be  payable  at  the  pleasure  of  the 
1  oited  States  after  one  year  from  the  date  of  their  issue  and  upon  the 

*  United  States  bonds  in  national  banks  to  secure  circu- 
lation   $227, 484,  000 

Other   United  States   bonds  in  national 

banks $17,  576,  925 

Other  bonds  held  by  national  banks  (esti- 
mated)    125,  000, 000 


Total  bonds  held  in  1895 112, 57(3,  950 

The  total  kecurities,  aside  from  United    States  bonds, 

held  by  national  banks,  most  of  which  are  bonds 148,  5G9,  950 


STRENGTHENING    THE   PUBLIC    CREDIT,  ETC.  249 

expiration  of  three  years,  or  bonds  payable  after  three  years  and  upon 
the  expiration  of  seven  years,  or  bonds  due  on  a  certain  day  within 
three  years  from  the  date  of  such  bonds,  as  the  Secretary  of  the  Treas- 
ury may  elect,  such  bonds  to  bear  interest  at  a  rate  not  exceeding  three 
per  centum  per  annum. 

Sec.  13.  That  when  the  amount  of  the  daily  total  reserve  held  by  any 
national  banking  association  averages  to  be  less  for  any  month  than 
the  amount  required,  it  shall  pay  into  the  Treasury  of  the  United  States 
a  tax  at  the  rate  of  six  per  centum  per  annum  on  the  amount  of  the 
average  deficiency  for  that  month  in  such  reserve. 

Whenever  any  association  fails  to  pay  on  demand  in  silver  or  gold 
coin  or  iu  United  States  legal-tender  notes  issued  to  other  associations 
the  greenbacks  and  currency  signed  by  its  officers  and  paid  out  by  it, 
it  shall  be  subject  to  and  shall  pay  an  additional  tax,  at  the  rate  of  one 
per  centum  per  annum,  on  a  sum  equal  to  the  average  amount  of  the 
individual  deposits  in  such  association  during  such  failure  and  until 
such  payment  is  resumed:  Provided,  That  in  case  any  association  pays 
one  half  the  tax  herein  imposed  on  or  before  the  day  it  is  due  and  pay- 
able the  other  half  shall  be  and  is  hereby  remitted.  And  whenever  it 
shall  appear  to  the  satisfaction  of  the  Comptroller  of  the  Currency  that 
any  one  of  the  four  kinds  of  money,  namely,  currency,  greenbacks,  silver 
coiu,  or  gold  coin,  of  the  United  States  is  at  a  premium  in  any  one  of 
the  central  reserve  cities  in  any  other  one  or  more  of  the  other  kinds 
of  money  herein  named,  it  shall  thereupon  become  his  duty  to  declare 
and  publish  the  same  in  the  "Statement  of  the  Condition  of  the  United 
States  Treasury  aud  its  Eeceipts  and  Expenditures,"  and  such  publica- 
tion shall  be  held  to  be  conclusive  evidence  that  all  the  associations  of 
deposit,  loan,  and  discount  as  herein  described  in  the  Uuited  States 
have  failed  to  pay  on  demand  in  silver  or  gold  coin  of  the  United 
States  their  greenbacks  and  currency,  and  the  tax  herein  imposed  tor 
such  failure  shall  be  due  and  payable  from  each  of  such  associations 
from  and  after  the  day  the  notice  of  such  failure  is  published  by  the 
Comptroller  of  the  Currency  in  the  "Statement  of  the  Condition  of  the 
1 1  nited  States  Treasury  and  its  Receipts  and  Expenditures,"  and  so  long 
as  such  failure  continues,  and  until  the  day  the  Comptroller  of  the  Cur- 
rency gives  notice  in  like  manner  that  such  failure  no  longer  continues. 

in  addition  to  all  other  taxes  imposed  in  this  Act,  each  association 
organized  under  it  shall  pay  into  the  Treasury  of  the  United  States  a 
tax  in  each  year,  as  the  Secretary  of  the  Treasury  shall  from  time  to 
time  prescribe,  equivalent  to  not  less  than  one-fifth  nor  more  than  one 
per  centum  per  annum*  on  the  average  amount  of  currency  issued  to  it 

•Four-fifths  of  the  present  paper-money  circulation  would  be 
$800,000,000;  one-halt  of  1  per  cent  per  annum  ou  the  currency  would 
yield  $4,000,000  per  annum.  The  losses  on  the  circulation  to  the  ("nited 
States  Treasury  on  notes  of  insolvent  banks,  as  shown  by  thirty-two 
years'  experience  under  the  existing  banking  laws,  were  not  $16,000,000 
during  the  whole  thirty-two  years  of  the  existence  of  the  national  banking 
system,  about  $500,000  per  annum,  had  the  national  banks  issued  their 
notes  under  the  provisions  of  this  bill.  The  Government  estimate  for 
the  bills  lost  and  worn  out  past  redemption,  and  to  the  advantage  of 
the  United  States  Treasury,  is  two-fifths  of  1  per  cent  per  annum  on  all 
circulation.  Excluding  the  $1  and  $2  bills,  the  loss  might  not  be  more 
than  one-half,  and  the  gain  to  the  United  States  at  one-tilth  of  1  per 
cent  on  the  $800,000,000  would  be  $1,600,000. 

For  the  last  five  years  the  1  per  cent  tax  now  collected  on  circulation 
has  averaged  $1,582,443.    The  banks  are  now  in  effect  carrying  without 


250  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

and  in  circulation  and  for  the  purpose  of  covering  any  loss  which  the 
Treasury  may  otherwise  sustain  by  reason  of  the  insolvency  of  any  asso- 
ciation to  which  currency  was  issued  under  this  Act :  Provided,  however. 
That  such  tax  shall  not  be  levied  to  exceed  one-fifth  of  one  per  centum 
per  annum  at  a  time  when  the  total  amount  of  all  moneys  paid  into  the 
Treasury  under  the  tax  imposed  in  this  clause  exceeds  by  eight  million 
dollars  the  total  net  amount  paid  out  of  the  Treasary  in  redemption  of 
the  currency  of  insolvent  associations  in  cases  where  the  assets  of  such 
associations  were  not  sufficient  to  pay  such  notes  or  sufficient  to  recoup 
the  Treasurer  of  the  United  States  for  the  payment  by  him  of  such  notes. 
A  tax  equal  in  amount  to  one  fifth  of  one  per  centum  per  annum  is 
hereby  imposed  on  the  average  amount  of  the  individual  deposits  sub- 
ject to  payment  by  check  or  draft  or  like  instrument,  whether  payable 
on  demand  or  at  some  future  time,  that  are  in  each  incorporated  bank- 
ing association,  trust  company,  insurance  company,  loan  association, 
or  other  corporation  doing  a  deposit  and  loan  and  discount  business,  by 
discounting  and  negotiating  promissory  notes,  drafts,  bills  of  exchange, 
and  other  evidences  of  debt;  by  receiving  deposits;  by  buying  and 
selling  exchange,  coin,  and  bullion;  by  loaning  money  on  personal 
security,  when  any  part  of  the  obligations  bought  or  received  or  sold  or 
issued  by  it  are  used  in  whole  or  in  part  in  commerce  among  the  several 
States:  (1)  Provided,  That  in  case  any  association  pays  one-half  the 
tax  herein  imposed  on  or  before  the  day  it  is  due  and  payable  the  other 
half  shall  be  and  is  hereby  remitted:  (2)  And  provided  further,  That 
any  association  is  hereby  authorized  to  deposit  in  the  Treasury  of  the 
United  States  an  amount  of  lawful  money  equal  to  not  less  than  twelve 
and  one-half  per  centum  of  the  amount  of  its  capital,  and  to  receive 
legal-tender  notes  of  the  United  States  to  the  amount  of  such  deposit. 
Such  notes  issued  to  it  shall  have  a  circulating  note  of  such  associa- 
tion printed  on  the  reverse  side,  which  note,  when  the  note  of  the  asso- 
ciation printed  on  the  reverse  side  is  signed  by  the  proper  officers  of 
the  association,  shall  be  known  as  a  greenback,  and  may  be  paid  out 
by  it,  but  under  the  same  liabilities,  obligations,  and  restrictions  as  to 
redeeming  such  greenbacks  in  silver  or  gold  coin  or  United  States  legal- 
tender  notes,  and  of  keeping  such  greenbacks  at  a  par  with  the  silver 
coin  and  the  gold  coin  of  the  United  States,  as  are  imposed  upon 
national  banking  associations  when  like  notes  are  issued  to  national 
banking  associations :  *  Provided,  hoicever,  That  the  securing  such  notes 

interest  every  dollar  of  the  $1,000,000,000  paper  money  in  circulation. 
The  saving  in  interest  to  the  people  under  this  bill  is  estimated  at  from 
$30,000,000  to  $50,000,000  per  annum,  ultimately  making  that  much  sav- 
ing per  annum  in  lower  rates  of  interest  on  the  loans  made  to  the  people. 
Besides  these  items,  J.  S.  McCoy,  Government  actuary,  estimates  the 
loss  to  the  people  in  interest  on  the  gold  carried  in  the  United  States 
Treasury  from  1879  to  181)5  at  $144,241,556.  It  will  be  more,  rather  than 
less,  in  the  next  twenty-five  years  under  the  present  system. 

*  Cash  reserve  required  in  1897 $2S7,742,000 

Cash  reserve  held  in  1897 388,883,000 

Including  State  banks  the  cash  reserve  held  could  not  be 

less  than 503,000,000 

Holding  the  cash  reserve  one-third  in  silver  would  equal  $180,000,000, 
and  one-third  in  gold  would  equal  $180,000,000,  one-third  in  greenbacks, 
$180,000,000;  total,  $563,000,000;  so  that  the  substitution  of  silver  dol- 
lars for  the  $1  and  $2  notes  added  to  the  $186,000,000  of  silver  dollars 
held  in  banks  in  the  reserve  fund  would  increase  the  actual  coin  silver 
dollar  in  constant  use  by  $325,000,000. 


STRENGTHENING   THE    PUBLIC    CREDIT,  ETC.  25] 

by  any  association  other  than  national  banking  associations  shall  con- 
fer upon  it  no  authority  to  issue  any  other  circulating  notes.  In  case 
any  association  takes  out  circulating  notes,  as  provided  in  tins  section 
and  named  greenbacks  in  this  Act,  the  tax  imposed  on  such  association 
in  this  section  shall  be  wholly  remitted;  but  in  case  such  notes  are 
taken  out  and  such  tax  is  remitted  such  association  shall  keep  such 
record  and  make  such  reports  to  the  Comptroller  of  the  Currency  and 
submit  to  such  examinations  by  national-bank  examiners  as  are  now 
or  may  hereafter  be  required  of  national  hanking  associations. 

Bach  deposit  of  money  or  funds  made  by  any  individual  or  by  any 
association  in  any  other  association  however  organized  doing  the 
banking  business  defined  in  this  section  upon  which  the  association 
receiving  such  deposit  pays  or  agrees  to  pay  any  money  or  interest 
shall  not  be  subject  to  withdrawal  excepting  on  a  day  named  in  a 
notice  given  in  writing  to  such  association,  and  not  less  than  thirty 
days  before  such  withdrawal :  Provided,  That  this  section  shall  not 
apply  to  the  total  amount  of  all  moneys  or  funds  deposited  within  the 
seven  days  next  preceding  such  notice,  or  to  moneys  or  funds  that 
banking  associations  are  required  to  keep  and  are  allowed  to  keep  in 
other  associations  as  a  part  of  their  reserve. 

This  section  of  this  Act  shall  take  effect  on  the  first  day  of  the  first 
calendar  quarter  next  succeeding  the  four  months  next  succeeding  the 
day  of  the  approval  of  this  Act. 

Sec.  14.  That  all  taxes  imposed  by  this  act  shall  be  due  and  payable 
semiannually  on  the  first  day  of  April  and  the  first  day  of  October  in 
each  year.  Any  clearing-house  association,  when  requested  so  to  do  by 
any  banking  association,  and  with  the  approval  of  the  Comptroller  of 
the  Currency,  may  assume  and  may  pay  any  tax  imposed  on  such  asso- 
ciation by  this  Act. 

All  moneys  received  under  this  Act  unless  otherwise  provided  shall 
be  covered  into  the  Treasury  as  a  miscellaneous  receipt.  The  Treasurer 
shall  keep  an  account  of  all  moneys  paid  into  the  Treasury  or  paid  out 
by  him  under  each  of  the  several  sections  of  this  Act  and  include  a 
statement  of  the  same  in  his  annual  report. 

Sec.  15.  That  upon  the  insolvency  of  any  association,  or  whenever, 
in  the  opinion  of  the  Comptroller  of  the  Currency,  the  complete  redemp- 
tion and  retirement  of  the  currency  issued  to  and  retained  by  any 
national  banking  association  is  then  necessary  for  the  protection  of  the 
United  States  Treasury  or  of  the  holders  of  such  currency,  the  Comp- 
troller may  take  possession  of  all  the  assets  of  such  association,  which 
assets  shall  be  held  to  include  the  liability  to  assessment  of  all  stock- 
holders, and  appoint  a  receiver,  who  is  hereby  authorized,  under  the 
direction  and  control  of  the  Comptroller  of  the  Currency,  to  create  and 
deliver  to  the  Treasurer  of  the  United  States  a  fund  equal  in  amount 
to  such  currency;  and  the  receiver,  under  the  direction  of  the  Comp- 
troller of  the  Currency,  is  hereby  authorized  to  sell  the  whole  or  any 
part  of  the  property  of  such  association,  or  to  pledge  the  whole  or  any 
part  of  its  property  or  assets,  at  any  time,  as  security  for  any  loan  he 
may  elect  to  make  in  order  to  create  such  fund:  and  if  there  shall  be 
any  assets  remaining  after  the  above-mentioned  fund  is  created  the 
Comptroller  of  the  Currency  shall  then  proceed  in  like  manner  to  create 
and  deliver  to  the  Treasurer  of  the  United  States  a  fund  equal  in 
amount  to  the  aggregate  of  all  deposits  of  moneys  made  in  the  associa- 
tion either  directly  or  indirectly  by  the  United  States  Treasurer,  includ- 
ing those  of  any  and  all  officers  or  agents  of  the  United  States  Govern- 
ment; and  the  receiver,  after  the  completion  of  such  fund  or  funds  or 
as  much  thereof  as  can  be  realized  from  the  assets,  and  not  before,  shall 


252       STRENGTHENING  THE  PUBLIC  CREDIT,  ETC. 

administer  the  remaining  assets,  if  there  be  any,  for  the  benefit  of 
creditors  and  shareholders  of  the  association;  and  the  Comptroller  of 
the  Currency  shall  have  like  power  and  authority,  and  shall  proceed  in 
the  same  manner  in  the  case  of  clearing-house  associations  organized 
under  this  Act. 

The  five  per  centum  reserved  from  the  moneys  deposited  by  the 
insolvent  association  for  the  current  redemption  of  the  greenbacks  of 
such  association  shall  be  free  moneys  in  the  Treasury,  and  the  five  per 
centum  on  the  currency  taken  out  which  was  deposited  for  the  current 
redemption  of  such  currency  shall  be  returned  to  the  receiver  of  the 
insolvent  association. 

The  greenbacks  and  currency  of  an  insolvent  association  shall  be 
immediately  redeemed  and  canceled  by  the  Treasurer  of  the  United 
States,  out  of  any  moneys  in  the  Treasury  not  otherwise  appropriated. 

Sec.  16.  That  the  Comptroller  may  at  all  times  know  the  condition 
of  each  national  banking  association,  each  association  shall  make  such 
record  at  the  close  of  each  day  as  the  Comptroller  shall  request,  in  a 
book  kept  for  that  purpose,  which  record  shall  show  the  total  amount 
of  its  currency  paid  out  and  in  circulation,  and  the  amount  of  cur- 
rency received  from  redemption  agents,  and  its  total  individual  deposit 
account,  and  its  total  reserve  account,  as  shown  by  its  books  at  the 
close  of  each  business  day,  and  of  what  the  reserve  consisted,  which 
daily  record  of  deposits,  reserve,  and  currency,  and  other  matter 
requested  by  the  Comptroller,  shall  be  made  up  in  duplicate  for  each 
month,  and  two  copies  or  reports  thereof  transmitted  to  the  Comp- 
troller of  the  Currency  on  or  before  the  tenth  day  of  the  following 
month. 

Before  making  the  record  for  the  day,  as  required  by  the  Comptroller, 
every  transaction  of  that  day  pertaining  thereto  shall  be  duly  entered 
in  the  books  of  the  association. 

The  records  and  reports  herein  provided  for,  and  any  other  facts  and 
data  he  may  request  of  associations  or  any  director  or  officer  thereof, 
shall  be  in  such  form  as  the  Comptroller  may  direct. 

Xational-bank  examiners  shall  be  held  to  be  employees  in  the  office 
of  the  Comptroller  of  the  Currency  while  examining  associations  whose 
business  is  covered  by  this  Act,  and  their  fees  for  such  examinations 
shall  be  paid  out  of  the  appropriation  for  the  Bureau  of  the  Currency. 

The  operation  of  so  much  of  all  laws  or  parts  of  laws  as  are  in  con- 
flict with  this  Act  is  hereby  suspended. 

ISTote. — The  "visible  gold" — gold  in  banks  and  in  the  United  States 
Treasury — is  reported  by  the  Comptroller,  on  page  22,  Report  of  1896, 
to  be  $421,236,388.    January  1,  1890,  visible  gold  amounted  to  about 

'10,000,000. 


APPENDIX. 

INDEPENDENT   TREASURIES. 

Boston,  Mass ?^-  01  ° 

New  York.  X.  Y F>,J, 360 

Chicago,  111 37,420 

San  Francisco,  Oal 27>   ™ 

New  Orleans,  La 20,  490 

St.  Louis,  Mo 22,  JJO 

Cincinnati,  Ohio lb>  '00 

Washington,  D.  0 oo'mn 

Baltimore,  Md 38,  010 

Philadelphia,  Pa -  •  •     4J«  340 

Total  expenses 4U,  ' ' l) 

EESERVE   CITIES. 


Boston,  Mass. 
New  York,  N.  Y. 
Brooklyn,  N.  Y. 
Albany,  N.  Y. 
Cleveland,  Ohio. 
Detroit,  Mich. 
Chicago,  111. 
Milwaukee,  Wis. 
Des  Moines,  Iowa. 
St.  Paul,  Minn. 
Minneapolis.  Minn. 
Omaha,  Nebr. 
Lincoln,  Nebr. 


San  Francisco,  Cal. 
St.  Joseph,  Mo. 
Kansas  City,  Mo. 
St.  Louis,  Mo. 
New  Oilcans.  La. 
Houston,  Tex. 
Savannah,  < la. 
Louisville,  Ky. 
Cincinnati,  Ohio. 
Washington,  D.  0. 
Baltimore,  Md. 
Philadelphia,  Pa. 
Pittsburg,  Pa. 


253 


A  COMPARISON 


OF   THE 


HILL-FOWLER  BILL,  H.  R.  10289, 


WITH   THE 


WALKER  BILL,  H.  R.  10333, 


BY 


SUBJECTS. 


PREPARED  BY  THE  CHAIRMAN  OF  THE  COMMITTEE. 


255 


256  HILL-FOWLER    BILL,  H.  R.  10289. 

A  comparison  of  the  Rill-Fowler  bill,  H.  R.  10289, 


P;ige.        Lino. 


NO  PROVISION  MADE  FOR  TRANSITION  PERIOD. 


No  provision  made  for  the  assistance  of  men  trained  in  the 
business — in  transacting  the  business  of  banking  for 
75,000,000  people,  and  soon  to  be  200,000,000. 

No  provision  made  for  an  appeal  from  the  decision  of  the 
Comptroller  in  any  case. 


NON-INCORPORATED  CLEARING  HOUSES. 

17  18  to  22  Country  divided  into  clearing-house  districts  by  the 
Comptroller  ^yhen  clearing  houses  have  no  legal  exist- 
ence.    (How  many.) 

17  23  to  25  Clearing-house  district  printed  on  currency  notes  issued 

in  it. 

18  lto    4  Clearing  house  city? 

18  2  to    4  Currency  notes  must  be  currently  redeemed  in  some  bank- 

ing association  in  a  clearing-house  eity  in  its  clearing- 
house district. 

19  4  to    9  Banking    associations    must    provide  for  the    "current 

redemption"  of  its  currency  notes  in  every  clearing-house 
district  in  which  its  notes  are  paid  out  over  the  counter 
of  banks. 
No   issue  of  emergency    "legal-tender   notes"   or  other 
emergency  "money"  provided  for. 


WALKER    BILL,  H.  R.  10333.  257 

with  the  WdlTcer  bill,  H.  R.  10333,  by  subjects. 

DURING  TRANSITION. 

Page.        Line. 

3      8  to  11  Banks  may  tame  greenbacks  to  50  per  cent  of  capital. 

3  22  to  25  The  taking  out  of  currency  restricted  to  an  amount  equal 

4  1  to    4      to  the  greenbacks  taken. 

6  2  to  8  Transition  is  completed  [when  $200,000,000  United  States 
notes  are  assumed  by  banks  and]  when  the  Treasurer 
sets  aside  certain  gold  in  the  Treasury  to  redeem  and 
cancel  the  balance  of  the  outstanding  United  States 
notes  [viz,  $14C,000,0001. 

9    21  to  24  After  thirty  days  from  the  completion  of  the  transition 

10  1  to   3      the  required  "cash  reserve"  of  banks  to  be  kept,  as  near 

as  may  be,  one-third  each,  in  gold  coin,  silver  coin,  and 
greenbacks. 

COMPTROLLER  OF  THE  CURRENCY  THE  EQUIVALENT  OF  THE  PRESI- 
DENT, AND  THE  BOARD  OF  ADVISERS  TO  SEVEN  DIRECTORS  OF 
THE  GENERAL  BANKING  BUSINESS  OF  THE  COUNTRY,  AS  ONE  HANK. 

BOARD   OF   SEVEN   ADVISERS. 

11  12  to  17  To  Comptroller  of  the  Currency. 

11  18  to  22  Members  are  the  president  of  the  chief  reserve  bank  in 

New  Orleans,  president  of  chief  reserve  bank  in  San 
Francisco,  and  the  presidents  of  the  chief  reserve  banks 
in  the  other  five  chief  reserve  cities. 

12  1  to   3  Are  to  meet  annually  or  upon  the  call  of  the  Comptrollei 

or  upon  its  own  motion. 
12      4  to   8  To  keep  a  record  of  its  doings. 

In  case  of  doubt  as  to  what  persons  are  to  act  on  the 
board  the  Secretary  of  the  Treasury  is  to  decide 
12      9  to  14  Parties  aggrieved  at  any  action  of  the  Comptroller  may 
appeal  to  the  board  of  advisers. 
Unanimous  decision  final. 

In  case  a  minority  dissents  the  decision  of  the  Secretary 
of  the  Treasury  final. 
14      5  to  10  May  annul  by  a  majority  vote  any  action  of  the  Comp- 
troller proposing  to  change  any  by-law  of  a  clearing 
house. 


INCORPORATED  CLEARING  BOUSES. 

FIVE   OR    MORE    ASSOCIATIONS    MAY   FORM   A   CLEARING 

HOUSE. 

12  15  to  22  The  act  of  "approving  the  by  laws"  by  the  Comptroller 
constitutes  the  banks  associated  to  adopt  tlicm  a  "  body 
corporate." 

12  23,24      Any  banking  association  may  be  admitted  a  member. 

13  1  to    4  May  exclude  any  association  with  approval  of  Comptroller 
13      5to    9  Any  association  may  withdraw  with  approval  of  Oomp 

troller. 
13    lOto  17  Profits  and  loss  to  be  shared  by  the  associations  making 
up  the  clearing  house,  in  the  proportion  that  the  capital 
of  each  bank  is  to  the  total  capital  of  all  members. 

B  &  c 1 7 


258  HILL-FOWLER    BILL,  H.  R.  1028S*. 

Page.       Line. 


ISSUE  AND  REDEMPTION  DEPARTMENT. 

2  23  to  25  To  Issue  and  Redemption  Department  "is  committed  ALL 

3  1  to  12      FUNCTIONS  of  the  Treasury  Department"  (excepting 

receiving  moneys  due  the  Treasury  Department  from 
debtors,  and  making  to  creditors  the  disbursements 
provided  for  by  law). 

SHALL  HOLD  all  "Guarantee"  and  "Redemption" 
funds  for  circulating  notes. 

Through  it  shall  be  conducted  the  operation  of  redeeming 
the  ''circulating  notes"  of  all  associations. 

Shall  be  transferred  to  it  all  gold  coin  and  bullion,  silver 
bullion,  silver  coin  and  United  States  notes  held  against 
"certificates,"  and  the  "FUNDS"  for  the  redemption 
of  "CIRCULATING  NOTES"  and  the  funds  for  the 
retirement  of  circulating'  notes. 


WALKER    BILL,  II.  B.  10333.  259 

Page.       Line. 

13    18  to  21  May  bay,  borrow,  sell,  or  loan  to  other  clearing  houses  or 

banks. 
13    22  to  21  Usury  laws  not  to  apply  to  transactions  of  clearing  houses. 
U      1  to   4  May   establish   a    department   to   "CURRENTLY    KE- 

I)EEM  ,J  the  greenbacks  and  currency  of  bunks. 
11     11  to  17  Five  or  more  clearing  houses  may  form  a  national  clearing 

house. 
All  provisions  relating  to  banks  in  their  relation  to  clear- 
ing houses  shall  apply  to  clearing  houses  in  their  rela- 
tion to  the  national  clearing  house. 
11     18  to  22  National  clearing  house  may  deal  in  any  bonds  approved 

of  by  the  Comptroller. 
11    23  May  provide  for  the  '"current  redemption"  of  "  circulating 

notes." 
15      1,       2  May  take  out  emergency  greenbacks  in  denominations  of 

not  less  than  $1,000,  secured  by  United  States  bonds. 

Section  11. 
15      3  to    6  May  be  designated  as  fiscal  agents  of  the  Government  and 

as  depositories  of  public  moneys. 
15      7  to  14  May  keep  their  bonds  and  moneys  with  the  United  States 

Treasurer  or  any  assistant  treasurer  with  the  approval 

of  the  Secretary  of  the  Treasury. 
15    15  to  18  Shall  be  subject   to  like  examination  by  national-bank 

examiners  as  banks,  and  to  make  such  reports  as  the 

Comptroller  may  request. 

15  19  The  meeting  together  of  the  employees  of  banking  asso- 

16  lto  20       ciations  to  make  "clearings"  shall  constitute  the  banks 

employing  such  persons  a  "clearing  house,"  and  make 
the  banks  they  represent  liable  to  a  tax  of  one-tenth  of 
1  per  cent  on  all  clearings  unless  they  submit  their  by- 
laws for  the  approval  of  the  Comptroller  and  become  a 
"body  corporate." 

17  17  to  21  Emergency  legal  tender  greenbacks  taken  by    clearing 

18  1  to    7      houses  or  banks  may  be  surrendered  and  the  bonds 

recovered,  or  any  other  greenback  may  be  deposited  to 
the  amount  of  the  greenbacks  taken  out,  plus  the  accumu- 
lated interest,  and  the  bonds  recovered. 


So  much  of  the  duties  named  as  are  necessary  are  devolved 
on  Secretary  of  the  Treasury,  the  Treasurer  of  the  dinted 
States  or  ou  the  Comptroller  of  the  Currency. 


260  HILL-FOWLER    BILL,  H.  R.  10289. 

Page.       LI  8- 

3  13  {*>  14  (Such  an  amount  of  "subsidiary  and  minor  coins"  as  the 
Secretary  of  the  Treasury  considers  necessary  for  "the 
issue  and  exchange  of  such  coins." 

3  17  to  19  Accounts  of  Issue  and  Kedemption  Department  "SHALL 
be  kept  entirely  .apart  and  distinct  from  the  other  divi- 
sions of  the  Treasury  Department." 

3  23  co  25  Eeserve  fund  SHALL  be  established  in  Issue  and  Re- 

4  L  co   6      demption  Department  of  25  per  cent  of 

8316  mil.  U".  S.  Notes. 


104  mil. 


Gold. 


450,000.000  =  $112,500,000 

and  5  per  cent  of 
$500,000,000  silver  =  25,000,000 


Total $137,500,000 

4  7  to  10  $137,500,000  gold  shall  be  held  as  a  "common  fund"  and 
used  exclusively  to  "redeem  United  States  notes,  Treas- 
ury notes,  silver  dollars  and  subsidiary  and  minor  coins." 
(See  page  3,  lines  13  and  14.) 

4  11  to  25  Gets  its  funds  at  the  option  of  the  Secretary  of  the  Treas- 

5  1  to  13      ury. 

5  Sec.  6.  TEN  mandatory  directions  for  doing  its  business. 

6  24  &  25  SHALL  "cancel"  such  amounts  of  notes  "redeemed  in 

7  lto    4      gold"  "as  SHALL  NOT   EXCEED  the  NATIONAL 

RESERVE    NOTES    ISSUED    SUBSEQUENT    TO 
THE  TAKING  EFFECT  OF  THIS  ACT." 


THREE  COMPTROLLERS  OF  THE  CURRENCY,  AT  A  COST  OF  $23,000. 

Duties  prescribed. 

First  Comptroller  a  sort  of  "Assistant  Treasurer." 
All  action  dependent  on  the  Secretary  of  Treasury. 
Page  7,  line  7. 
1      6  to  11  Comptrollers  do  duty  of  present  Comptroller. 
Manage  Issue  and  Redemption  Department. 

1  12  Present  office  of  Comptroller  abolished. 

2  1  &  2  Comptrollers  appointed  by  President  and  Senate. 
2        3  &  4  Comptrollers  removed  by  President  and  Senate. 

2      4  to  9  Appointed  for  4,  8,  12  years;  then  for  12-year  terms. 

2    10  &  11  In  a  Comptroller's  last  four  years  he  is  to  be  First  Comp- 
troller. 

2    12  to  18  First  Comptroller,  practically  Assistant  Treasurer,  has  cus- 
tody of  all  funds.     To  give  $250,000  bond. 
12      6  to  14  To  prepare  three  kinds  of  "  circulating  notes,"  etc. 

14  6  to  13  After  four  years  MAY  reduce  deposit  of  United  States 

bonds. 
After  eight  years  no  bonds  shall  be  required. 

15  9  to  14  When  no  more  United  States  notes  are  available  as  a  basis 

for  "CIRCULATING  NOTES"  THE  deposit  of  such 
notes  SHALL  no  longer  be  required  (see  page  16,  lines 
10  to  14),  but  the  deposit  of  "  gold  coin  "  for  them  may 
be  required. 

15  15  to.  18  May  issue  reserve  notes  upon  the  deposit  of  gold  coin. 

16  10  to  14 


WALKER    BILL,  U.  K.  10333.  261 

Tage.        Lino. 


PRESENT   COMPTROLLER   OF  THE   CURRENCY  AT   PRESENT   COST  OF 

$5,000. 

3  22  to  25  SHALL  issue  "  CURRENCY "  only  to  the  amount  of 

4  1  to   4      greenbacks  taken  during  transition. 

4  5  to  11  Thereafter  he  SHALL  issue  "  CURRENCY  "  to  each  bank 

not  less  in  amount  than  its  "  greenbacks  "  and  not  less 
than  25  per  cent  in  excess  of  its  average  circulation  of 
"  currency  "  during  the  two  years  next  preceding,  and 
MAY  issue  to  the  full  amount  of  actual  capital. 

5  3  to    5  May  print  currency  or  greenbacks  in  anticipation  of  us.-. 
8      5  toll  May  extend  corporate  limit  of  associations. 

Mav  allow  banks  to  reduce  their  greenbacks  to  required 
amount,  with  approval  of  Secretary  of  the  Treasury. 
8    12  toll  Shall  destroy  currency  surrendered  to  him. 

10  4  to    6  May  allow  associations  to  keep  their  bonds  and  com  in  any 

suitable  place. 

11  12  to  17  Board  of  advisers  to. 

12  1  to   3  May  call  a  meeting  of  board  of  advisers  at  any  tune  or 

place. 
12      9  toll  An  appeal  maybe  taken  from  all  decisions  ffl  the  Comp- 
troller to  the  board  of  advisers. 

12  15  to  22  Bylaws  of  clearing  houses  must  be  approved  by  comp- 

troller. 

13  1  to   4  Clearing  houses  can  not  expel  an  association  without  the 

approval  of  the  Comptroller. 


262  HILL-FOWLER    BILL,  H.  K.  10289. 

Page.        Line. 

15  19  to  25  When  no  more  "  reserve  notes"  are  available,  the  taking 

out  of"  reserve  notes"  shall  be  no  longer  required. 
When  "reserve  notes"  are  "no  longer  available,"  bank- 
ing associations  can  issue  "  currency  notes"  under  the 
restriction  of  page  11,  lines  10  to  24,  and  page  14,  lines 
18  to  21. 
1G  1  to  5  Gives  unlimited  power  to  withdraw  from  circulation 
"reserve  notes"  down  first  to  40  per  cent  to  capital  and 
finally  using  all  the  gold  reserve,  etc.  (forcing  the  hands 
of  the  Secretary  of  the  Treasury). 

16  G  to   8  Thereafter  the  Comptroller  shall  equitably  "  withdraw  " 

"  reserve  notes." 

16  24  &  25  Reserve  notes  withdrawn  and  canceled  by  the  use  of  sur- 

plus revenue  shall  not  be  reissued  (when  "  reserve  notes  n 
are  withdrawn  by  the  use  of  surplus  revenue,  no  increase 
of  such  notes  can  thereafter  be  made). 

17  5  to  12  May  reduce  "  currency  notes  "  of  banks  by  depositing,  etc., 

with  the  Assistant  Treasurer.  (Where  is  the  "Assistant 
Treasurer"  provided  for?) 
17  12  to  17  May  reimburse  banks  for  surplus  of  "  bank  notes," 
"REDEMPTION  FUNDS,"  or  "  currency  -  note " 
"  GUARANTEE  FUND  "  above  amount  required  to  be 
held  against  "  circulation." 

17  18  to  25  To  divide  the  United  States  into  redemption  districts  for 

redemption  of  "  currency  notes." 

18  19  to  25  In  case  of  failure  to  redeem  in  "  gold  coin,"  they  to  imine- 

19  1  to  21      diately  put  association  into  insolvency. 

20  13  to  23  Shall  assess  each  bank  not  exceeding  1  per  cent  on  their 

"  currency  notes  "  in  circulation  to  guarantee  all  "  cur- 
rency notes." 

20  24  &25  (See  page  4,  lines  7  to  10.)     May  invest  "gold  guarantee 

fund  "  in  "  United  States  obligations  "  at  "  not  exceed- 
ing 6  per  cent  premium  "  ( ?)  for  benefit  of  the  "  fuud." 

21  20  to  23  MAY  provide  for  redemption  of  "reserve"  and  "bank" 

notes  at  subtreasuries. 

22  12  to  23  When  the  circulating  notes  of  any  bank  shall  be  presented 

for  redemption  in  sums  of  $1,000,  made  up  of  reserve 

notes,  bank  notes,  and  currency  notes,  or  any  one  of 

them,  at  the  Treasury  or  subtreasury,  the  same  shall  be 

redeemed  in  gold  coin. 

°3    w  to  251 

^.       -  ,    "j.  I  Banks  to  report  to  the  Comptroller. 

rOne-fourth  of  1  per  cent  per  annum  tax  on  franchise,  less 

24  14  to  25      one-half  per  cent  premium  paid  on  reserve  notes  taken 

25  1  to   3      out,  to  support  Department  of  Comptroller  of  the  Cur- 

[    rency. 

26  12  to  15  May  permit  banks  to  establish  "branches." 

28      4  to  11  May  get  reports  provided  in  Walker  bill.     (Very  clumsy 
phraseology.) 

28  20  to  25  May  permit  national  banks  to  organize  under  the  act. 

29  15  to  24  May  permit  State  banks  to  organize  under  the  act. 

31      8  to  11  May  prepare  "circulating  notes"  in  anticipation  of  delivery 
to  banks. 


WALKER    BILL,   H.  R.  10333.  263 

Page.       Line. 

14      5  to  10  Changes  of  by-laws  of  clearing  houses  to  be  valid  must 
have  the  approval  of  the  Comptroller. 
May  annul  any  clearing  house  by-law  with  the  concurrence 
of  a  majority  of  the  board  of  advisers. 

16  21  to  24  May  issue  to  clearing  houses,  or  banks,  emergency  green- 
banks  secured  by  bonds  in  denominations  not  less  than 
$1,000  to  the  amount  of  90  per  cent  of  such  bonds, 
interest  to  be  paid  on  such  greenbacks  by  the  associa- 
tion taking  them,  at  the  rate  of  G  per  cent  per  annum. 

20  6  to  24  To  decide  when  banks  are  to  be  taxed  on  their  deposits 

for  failure  to  maintain  parity,  and  on  the  beginning  and 

21  1  ending  of  the  period  of  taxation. 

25      7  to  23  May  take  possession  of  the  assets  of  unsound  banks  and — 
First.  Create  a  fund  to  secure  the  payment  of  "  currency 
notes." 

25  24  Second.  Create  a  fund  to  secure  the  payment  of  "Gov- 

26  1  to  14  ernment  deposits." 

27  1  to  21  To  have  monthly  reports  of  the  daily  condition  of  banks, 

and  such  other  reports  as  he  may  request. 


264  HILL-FOWLER    BILL,  H.  K.  10289. 

Page.        Line. 


A  strictly  "  bank  note,"  called  "  KATIONAL-RE  SERVE 
NOTE,"  is  substituted  for  United  States  notes  and 
declared  "  legal  tender." 


WALKER    BILL,  H.  R.  10333.  2G5 

Page        Line. 

$200,000,000  UNITED  STATES  NOTES  PRESERVED  AS  GREENBACKS. 

2      4  to  10  Deposit  "  lawful  money  "  for. 

2  21  to  25  Deposit  United  States  notes,  Treasury  notes,  coin  or  coin 

3  1  to    7      certilicates  equal  to  124  per  cent  of  actual  capital  for  new 

issue     of    "  UNITED"    STATES  -  LEGAL    TENDER 

NOTES." 
3    12 to  15  Tbey  are  made  the  "promise  to  pay"  of  the  bank,  by 

the  signatures  of  its  officers. 
3    20  to  21  Name  of  United  States  legal-tender  note,  plus  currency 

note,  is  "greenback." 
5     14  to  18  Five  per  cent  current  redemption  fund  furnished  by  United 

States  Treasurer  as  a  common  fund  for  "  greenbacks  " 

and  "currency." 
7       7  to  11  Holdings  to  be  reduced  to  12J  per  cent  to  capital  to  all 

associations    from    moneys   paid  for  greenbacks   after 

transition  is  effected. 
7     12  to  15  Amount  of  greenbacks  held  by  a  bank  may  be  increased 

by  the  Treasurer  to  amount  required. 

7  16  to  21  To  be  reduced  below  12£  per  cent  to  capital  as  banking 

capital  increases  so  as  to  keep  total  amount  uniform 
[viz.,  $200,000,000]. 

8  1  to   4  May  be  reduced  by  banks  to  the  amount  required  with  the 

and        approval  of  the  Comptroller  and  the  Secretary  of  the 
8  to   6      Treasury. 
8      5  to  11  Upon  the  expiration  of  corporate  existence  by  insolvency, 
or  by  consent  of  Comptroller  approved  by  Secretary  of 
the  Treasury,  the  Treasurer  shall  finally  redeem  green- 
backs. 

8  18  to  25  Each  bank  to  keep  good  its  proportion  of  the  5  per  cent 

redemption  fund  furnished  by  the  Treasurer. 

9  1  to   2  Current  redemption  fund  can  not  becounted  in  the  reserve 

of  any  bank. 
9      3  to   8  Sums  of  greenbacks  and  currency  aggregating  $500  or  1 
per  cent  to  capital,  of  any  association,  to  be  redeemed. 
9      9  to  11  Shall  redeem  in  "  LAWFUL  MONEY."'  its  «  greenbacks,-' 
and  "currency"  at  its  own  banking  house  and 
Atan  agency  approved  by  the  Comptroller,  in  some  reserve 
city. 
10      7  to  13  Banks  to  maintain  parity,  or  be  in  default. 

10  14  to  17  Can  not  plead  in  defense,  when  in  default,  that  its  own 

"greenbacks"  are  "United  states  notes." 

11  1  to  11  Not  to  be  issued  in  denominations  of  less  than  $3. 

15  1  to   2  Emergency  greenbacks  secured  by  bonds  in  denominations 

16  21  to  24      of  not  less  than  $1,000  may  be  taken  out  by  banks  or 

17  1  to  21      clearing  house. 

18  lto    7 

26  15 to  17  Five  per  cent  reserved  for  redemption  fund  to  be  free 
moneys  in  the  Treasury  in  case  of  insolvency. 

26  22  to  25  In  case  of  insolvency  1<>  be  immediately  redeemed  by  the 
Treasurer  and  canceled. 


266 


HILL-FOWLER    BILL,  H.  R.  10289. 


Page 

i.        Line. 

8 

16  to  25 

9 

20  to  24 

10 

lto    7 

12 

15  to  20 

13 

18  to  23 

15 

15  to  18 

16 

10  to  14 

15 

19  to  25 

16 

lto   5 

16 

6  to   8 

16 

8&    9 

16 

24&25 

16    25  to  23 


17 

lto   4 

21 

14  to  20 

19 

2  to   4 

20 
21 

22 
21 
22 
23 

lto   5 
21  to  23 
12  to  23 
25  &  25 
12  to  23 

6  to    8 

24 

21  to  24 

28 
29 

12  to  19 
4  to  11 

NATIONAL   "RESERVE  NOTES." 

Exchange  of  United   States   notes    (only)   for   "reserve 

notes."' 
Redeemable  in  "gold  coin"  ONLY. 
May  exchange  United  States  notes  for  "reserve  notes" 

equal  to  its  paid-up  capital. 
To  imitate  the  present  United  States  legal-teuder  note 

and  contain    "promise   of   association"    to  redeem  at 

office  in  gold  coin. 
This  bank  note  a  "full  legal-tender"  excepting  for  duties 

on  imports  and  interest  on  the  public  debt. 
May  be  "used  in  reserves  of  any  association." 
Deposits  of  gold  coin  instead  of  United  States  notes  for 

them,  but  not  in  excess  of  reserve  notes  destroyed. 
Comptrollers  may  dispense  with  their  use. 
Withdraw  holdings  above  40  per  cent  to  be  first  made. 
Thereafter  such  withdrawal  SHALL  be  equitably  made. 
Destroy  all  reserve  notes  "withdrawn." 
Once  "surplus  revenues"  are  used  to  cancel  reserve  notes, 

no  more  "reserve  notes"  can  thereafter  be  issued. 
Surplus  funds  as  "surplus  revenue"  (after  United  States 

notes  and  Treasury  notes  are  destroyed)  used  to  cancel 

"reserve  notes." 
Reserve  notes  of  any  association  decreased  shall  not  lessen 

the  "circulating  notes"  any  banking  association  would 

otherwise  be  entitled  to.     (See  page  15,  lines  18  to  25.) 
Shall  keep  in  Issue  and  Redemption  Department  a  "re- 
demption fund"  in  "gold  coin  equal  to  5  percent  of  its 

'reserve  notes'"  (and  bank  notes). 
In  case  of  insolvency  to  be  redeemed  from  the  general 

"reserve"  in  Issue  and  Redemption  Department. 
Upon  redemption,  in  case  of  insolvency,  shall  be  destroyed. 

Shall  be  redeemable  at  "sub treasuries". 


Shall  be  currently  redeemed  in  gold  coin  in  amounts  of 

$1,000,  including  all  circulating  notes. 
(Old  law)  5  per  cent  gold  redemption  fund  can  be  counted 

in  reserve. 
Banks  paid  £  per  cent  per  annum  premium  for  taking  out 

reserve  notes. 
The  takiug  of  "reserve  notes"  made  compulsory. 
Banks  shall  be  dissolved  upon  failure  "to  comply  with  any 

provision  of  this  act." 


NATIONAL   "BANK   NOTES.' 


9      1  to   3  Depositing  United  States  bonds  for  "bank  notes." 
9      9  to  11  Can  secure  "bank  notes"  plus  "currency  notes"  to  an 
and  18      amount  equal  to  its  "  paid  up  capital." 
10      8&    9  May  take   "bank  notes"  equal  to  par  of  United  States 
10     14  to  27       bonds  deposited,  and  to  amount  of  capital,  page  9,  line 
24,  and  page  11,  line  17,  but  reduced  by  currency  notes 
taken. 


WALKER   BILL,  H.  R.  10333.  267 

Page.       Line. 


Has  no  corresponding  note. 


Has  no  corresponding  note. 


268  HILL-FOWLER    BILL,  H.  R.  10289. 

Page.       Line. 

11  5  to   9  If   bonds    depreciate    below  par,   more  bonds  must  be 

deposited. 

12  23  to  25  To  imitate  present  "  NATIONAL  BANK  NOTES." 

13  1  to   3  Contain  promise  of  association  to  redeem  at  its  office  in 

gold  coin  or  ''reserve  notes." 

14  1%  9} Legal  tender  "between  banks." 

14  3  to  5  Can  not  "count  ITS  OWN"  bank  notes  or  currency  notes 
in  its  casli  or  "cash  assets." 

17  lto  4  Canceling  reserve  notes  of  any  bank  by  use  of  "surplus 
revenue"  not  to  lessen  "circulating  notes"  of  such  bank. 
(See  page  14,  lines  18  to  21.) 

17  5  to  12  Banks  may  reduce  bank  notes  by  depositing  with  the 
"ASSISTANT  TREASURER"  in  charge  of  the  Issue 
and  Redemption  Department  a  sum  in  gold  coin  equal 
to  the  amount  of  the  reduction  desired,  or  by  redeem- 
ing its  notes  in  gold  and  sending  them  to  the  Comp- 
trollers of  the  Currency. 

21  14  to  20  Shall  keep  in  Issue  and  Redemption  Department  a  "re- 
demption fund"  in  gold  coin  equal  to  5  per  cent  of  its 
"bank  notes." 

19  4  to   9  Bonds  deposited  to  be  sold  to  redeem  bank  notes  in  case 

of  insolvency. 

20  1  to   5  Destroyed  when  redeemed,  in  case  of  insolvency. 

21  21  to  °3) 

29    .ox   oo| Redeemable  at  Treasury  or  "subtreasuries"  only. 

21  24  &  25)  SHALL  be  ''currently  redeemed"  in  gold  coin  in  sums  of 

22  13  to  23J     $1,000,  made  up  of  all  kinds  of  circulating  notes. 

23  6  to   8    (Old  law)  Its  5  per  cent  gold  redemption  fund  can  be 

"COUNTED  IN  ITS  RESERVE." 


"CURRENCY  NOTES." 

NOT    SECURED    BY    THE     GUARANTY    OF    THE    GOVERN- 
MENT. 

9      4  to   8  Bank  assets  liable  for  "currency  notes." 
9      9  to  11  Can  take  out  "currency  notes"  plus  "bank  notes"  to  an 
and  18      amount  equal  to  its  paid-up  capital. 

11  10  to  24  Restrictions  not  to  exceed  "reserve  notes"  taken;  not  to 

exceed  bank  notes  taken;  not  to  exceed  40  per  cent  to 
paid-up  capital,  but  can  take  20  per  cent  more,  with  40 
per  cent  of  bank  notes,  equals  100  per  cent  by  paying  0 
per  cent  per  annum  tax  on  last  20  per  cent. 

12  11  In  denominations  of  $10,  and  multiples  thereof  for  all  cir- 

culating notes. 

13  4  to   9  Shall   contain  promise   of  association  to   redeem  at   its 

office  in  gold  coin  or  "reserve  notes." 

13  10  to  15  To  state  on  its  face  issued  under  this  act. 

17     18  to  22  To  state  on  its  face  its  clearing-house  district. 
17    23  to  25  To  state  on  its  face  the  number  of  its  clearing-house  dis- 
trict.    (How  many  clearing-house  districts.) 

14  1  &   *>  }Le£al  tender  "between  banks." 

14      3  to   5  Can  not  count  its  own  "currency  notes"  in  its  cash  assets^ 


WALKER    BILL,  H.  Ii.  10333.  269 

raze.       Llnfe. 


"CURRENCY." 
SECURED    BY    TIIE    GUARANTY    OF    THE   GOVERNMENT 

4  5  to  11  SHALL  be  issued  to  banks  equal  in  amount  to  25  per  cent 
more  than  the  currency  the  bank  averaged  to  have  in 
circulation  during  the  two  years  next  preceding  (to  be 
determined  by  amount  of  currency  a  tax  \v;is  paid  on  . 
and  the  Comptroller  may  issue  currency  to  a  bank  to  the 
full  amount  of  actual  capital. 

4  12  to  15  Current  redemption  fund  equal  to  5  per  cent  of  currency 
in  actual  circulation. 

4    16  to  18  A  common  redemption  fund  for  currency  and  greenbacks. 

4  19,     20  Lawful  name  "currency." 

5  1,      2  To  have  printed  on  it  that  it  is  to  be  finally  redeemed  by 

the  Treasurer  of  the  United  States. 
5       3  to    5  Supply  may  be  printed  in  advance  of  use. 
8    12  to  17  May  be  reduced  only  by  being  surrendered  to  Comptroller. 

8  l8to-5  Each  bank*  to  keep  good  its  5  per  cent  current  redemption 

fund  on  its  currency  and  the  5  per  cent  redemption  fund 
on  greenbacks  furnished  by  the  Treasurer. 

9  1,       2  Current  redemption  fund  can  not  be  counted  in  the  reserve 

of  any  bank. 


270  HILL-FOWLER    BILL,  H.  R.  10289. 

Page.        Line. 

17  1  to  5  Withdrawal  for  cancellation  of  "reserve  notes"  of  any 
bank  not  to  lessen  ''circulating  notes"  of  such  bank. 

17  5  to  12  May  reduce  holding  of  "currency  notes"  by  depositing 
with  the  "Assistant  Treasurer  in  charge  of  the  Issue 
and  Eedemption  Department"  a  sum  in  gold  coin  equal 
to  the  amount  of  the  reduction  desired,  or  by  redeeming 
its  notes  in  gold  and  sending  them  to  the  Comptroller 
of  the  Currency.  (Where  is  the  provision  for  an  Assist- 
ant Treasurer?) 

17  18  to  25  Shall  be  "redeemed"  in  their  respective  districts. 

18  1  to   4  Shall  be  "currently  redeemed"  by  some  association  in  a 

clearing-house  city  of  its  own  district. 

18  19  to  25  Failure  to  redeem  any  circulating  notes  in  gold  an  act  of 

19  1  to  25      insolvency,  and  bank  is  immediately  put  in  liquidation. 

18  5  to  10  Can  not  be  paid  out  "over  the  counter"  of  all  banks  out- 
side its  district,  unless  there  is  a  redemption  agency  in 
all  redemption  districts. 

18    11  to  18  Shall  keep  an  amount  in  "gold  coin"  in  the  Issue  and 
23     17  to 21      Eedemption  Department  as  a  "guarantee  fund"  equal 

to  5  per  cent  of  its  currency  notes  "not  returned  to  the 

Comptroller." 

18  19  to  25  "Guarantee  fund"  used  to  redeem  currency  notes  in  case 

of  insolvency. 

19  10  to  12  Surplus  over  amount  received  on  sale  of  bonds  over  that 

necessary  to  pay  "bank  notes"  to  be  applied  to  the 
redemption  of  "currency  notes"  in  case  of  insolvency. 

20  1  to   5  Destroyed  when  redeemed  in  case  of  insolvency. 

22  13 to 23  SHALL  be  currentlv  redeemed  in  gold  (as  "circulating 

notes")  at  SUBTEEASURIES  in  sums  of  $1,000  for  all 
notes.     (See  page  21,  lines  14  to  20.) 

23  6  to    8  Can  not  count  its  5  per  cent  gold  "guarantee"  fund  in  its 
9  to  17      reserve. 

23  Six  per  cent  tax  per  annum  on  "currency  notes"  exceed- 

ing 40  per  cent  to  capital  or  plus  bank  notes  exceeding 
80  per  cent  to  capital. 

23  18  to  21  Tax  on  all  the  last  20  per  cent  of  60  per  cent  capital  of 
currency  notes  to  capital  not  returned  to  the  Comptroller 
or  "gold  coin"  deposited  with  Comptroller  for  their 
retirement. 

23  2^  to  25 1 

24  1  to    6  r"ax  on  currency  notes  collected  each  month. 

25  13  to  20  Deposit  of   gold   coin  required  equal   to  its   "  currency 

notes"  in  circulation,  in  case  of  insolvency. 


"CIRCULATING  NOTES." 
(USED   FOURTEEN   TIMES.) 

3  5  Means   "reserve  notes,"  "bank  notes,"  and   "currency 

notes." 

3  16  Means   "reserve  notes,"  "bank  notes,"   and  "currency 

notes." 

8  16  The  words  "circulating  notes"  defined  as  including  "re- 

serve notes,"  "bank  notes,"'  and  "currency  notes." 


WALKER    BILL,   H.  R.  10333.  271 

Line. 

9  2  to  8  Sums  of  greenbacks  and  currency  aggregating  $500,  or 
aggregating  1  per  cent  to  capital,  of  any  association  t<» 

be  redeemed. 

9  9toll  Shall  redeem  in  "LAWFUL  MONEY"  its  "greenbacks" 
and  currency  at  its  own  banking  house,  and  also  at  an 
agency  appointed  by  the  Comptroller  in  some  "reserve 
city." 

10  14  to  17  Banks  to  maintain  parity  or  be  subject  to  penalty  tax. 

11  1  to  11  Not  to  be  issued  in  denominations  less  than  $3. 

L'l  3  to  17  Taxed  not  more  than  one-fifth  of  1  per  cent  per  annum 
when  there  is  $8,000,000  in  the  Treasury,  accumulated 
for  this  tax  and  in  no  ease  over  1  percent  per  annum,  at 
the  discretion  of  the  Secretary  of  the  Treasury. 

26  18  to  21  The  5  per  cent  redemption  fund  to  currency  to  be  returned 
to  associations  in  case  of  insolvency. 

26  22  to  25  In  case  of  insolvency,  currency  to  be  immediately  redeemed 
and  canceled  by  United  States  Treasurer. 


"CIRCULATING  NOTE." 
(USED    POUB    TIMES.) 

3  4  Means  "  greenback." 

3  10  Means  "greenback." 

9  6  Means  "greenbacks"  and  "currency." 

1-1  23  Means  "greenbacks"  and  "currency.*' 


272  HILL-FOWLER    BILL,  H.  R.  10289. 

Page.        Line. 

9  2  Means  "  bank  notes  "  received   upon  deposit  of  United 

States  bonds. 
10  19  Means  "  bank  notes  "  in  circulation  when  the  act  shall  be 

passed. 
12  10  Means   "reserve   notes,"   "bank  notes,"  and  "currency 

notes." 

14  20  Means  "reserve  notes,"    "bank   notes,"  and   "currency 

notes." 
(When  bonds  are  withdrawn  "  bank  notes  "  are  necessarily 
retired  by  the  amount  of  bonds  withdrawn,  as  "bank 
notes  "  are  described  as  bond-secured  notes.  (See  page 
9,  lines  1  to  3.)  To  keep  up  the  amount  of  "circulating 
notes"  the  vacuum  caused  by  the  withdrawal  of  "bank 
notes "  must  be  supplied,  if  at  all,  by  taking  out  one- 
half  "  reserve  notes  "  and  one-half  "  currency  notes,"  as 
provided  in  page  11,  lines  10  to  24,  subject  to  the  pro- 
vision on  page  17,  lines  1  to  4.) 
17  3  Means  "bank  notes"  and  " currency  notes "  which  must 

supply  the  place  of  the  withdrawn  "  reserve  notes,"  one- 
half  of  each,  as  provided  on  page  11,  lines  10  to  24,  sub- 
ject to  page  14,  lines  18  to  21. 

15  12  Means  "reserve  notes,"   "bank  notes,"  and   "currency 

notes"  (and  that  the  depositing  of  United  States  notes 
and  the  securing  "reserve  notes,"  as  provided  on  page 
11,  lines  10  to  24,  is  a  "  basis"  or  condition  precedent  to 
securing  either  "  bank  notes  "  or  "  currency  notes,"  and 
continues  for  all  time,  excepting  as  modified  on  page  10, 
lines  15  to  25,  and  page  17,  lines  1  to  4). 
17  3  Means  "reserve  notes,"    "bank   notes,"   and  "currency 

notes." 

17  17  Means  "reserve  notes,"  "bank  notes,"  and  "currency 

notes." 

18  24  Means  "reserve  notes,"  "bank    notes,"  and  "currency 

notes." 

21  17  Means  the  present  bank  notes  secured  by  bonds. 

22  12  Means   "  reserve  notes,"   "  bank   notes,"  and  "  currency 

notes." 
29  9  Means  "reserve   notes,"  "bank    notes,"  and  "currency 

notes." 


SPECIAL  FUNDS  TO  BE  HELD  IN  TREASURY. 

A  RESERVE  FUND. 

A  REDEMPTION  FUND. 

A  GUARANTEE  FUND. 

2  23  to  25  Issue  and  Redemption  Department  "shall  redeem  the  cir- 

3  1  to  12       circulating  notes  of  banking  associations,"  shall  hold  all 

"redemption  funds"  and  all  "guarantee  funds  "of  banks. 

3  23  to  15  To  the  Issue  and  Redemption  Department  shall  be  com- 

4  1  to    0      mitted  $137,500,000  gold  to  redeem  United  States  notes 

and  Treasury  notes.  (Amount  to  be  "kept"  in  this  fund 
decided  by  the  Secretary  of  the  Treasury.  Page  4,  lines 
11  to  18.) 


WALKER    BILL,  H.  R.  10333.  273 

Page.       Line. 


SPECIAL  FUNDS  TO  BE  HELD  IN  TREASURY. 
ONLY   A   CURRENT   REDEMPTION  FUND. 

1G  to  18  Equal  to  5  per  cent  of  currency,  it  averages  to  keep  in  cir- 
culation held  as  a  common  "  current  redemption  fund" 
for  the  current  redemption  of  "greenbacks"  and  "cur- 
rency." 

14  to  18  Filial  to  5  per  cent  of  greenbacks,  held  as  a  common  ••cur- 
rent redemption  fund"  for  the  current  redemption  of 
"greenbacks"  and  "currency." 

B  &  C IS 


274  HILL-FOWLER    BILL,   H.  R.  10289. 

Page.        Line. 

17  12  to  17  Issue  and  Kedemption  Department  may  return  to  Dauks 
any  excess  in  the  Guarantee  Fund  or  Redemption  Funds. 

21  6  to  13  Issue  and  Redemption  Department  to  add  to  Guarantee 
Fund  and  to  Redemption  Funds  all  receipts  from  invest- 
ments of  such  funds  and  all  taxes  on  circulation.  (See 
page  17,  lines  12  to  17.) 

21  14  to  20  Gives  Issue  and  Redemption  Division  a  basis  for  estimating 
the  redemption  fund  of  each  bank,  viz,  equal  to  5  per  cent 
of  "  bank  notes  "  and  5  per  cent  of  "  reserve  notes." 


CANCELING  UNITED  STATES  NOTES  AND  TREASURY  NOTES. 

6  24,     25  Issue  and  Redemption  Department  shall  cancel  an  amount 

7  1  to   4      of  United  States  notes  or  Treasury  notes,  that  gold  coin 

has  been  exchanged  for,  as  shall  not  exceed  the  amount 
of  national  "'reserve  notes"  issued  subsequent  to  the 
taking  effect  of  this  act.* 

7  5  to  12  Secretary  of  the  Treasury  may  in  his  discretion  from  any 
fund  in  the  general  Treasury  not  otherwise  appropriated, 
transfer  to  the  Department  of  Issue  and  Redemption  any 
United  States  notes  or  Treasury  notes  WHICH  on  such 
transfer  COULD  THEN  LAWFULLY  BE  CAN- 
CELED *  *  *  IF  THEY  HAD  BEEN  RE- 
DEEMED ON  PRESENTATION;  and  when  so 
transferred  the  same  shall  be  canceled. 
10  5  to  7  United  States  notes  received  in  Issue  and  Redemption 
Department  for  "reserve  notes"  shall  be  canceled  as 
received. 

7  13  to  19  Whenever  there  may  be  United  States  notes  including 
Treasury  notes  in  the  general  Treasury  NOT  AVAIL- 
ABLE as  "surplus  revenue"  they  may  be  exchanged 
with  the  Department  of  Issue  and  Redemption  for  "gold 
coin"  and  such  notes  SHALL  THEREUPON  BE 
CANCELED. 

7  20  to  24  United  States  notes  including  Treasury  notes  once  re- 
deemed shall  not  be  paid  out  except  for  gold. 

7  25  United  States  notes  or  Treasury  notes  accumulated  in  the 

8  1  to    7      Department  of  Issue  and  Redemption  may  be  invested 

by  the  SECRETARY  OF  THE  TREASURY  in  inter- 
est-bearing obligations  of  the  Government  for  the  bene- 
fit of  the  gold  reserve  in  the  Department  of  Issue  and 
Redemption  subject  to  sale  by  the  SECRETARY  OF 
THE  TREASURY. 

■' 

*  Paying  out  <jold  coin  in  exchange  for  United  States  notes  and 
Treasury  notes  is  "redeeming  them  on  presentation." 


WALKER    BILL,   II.  It.   10333.  275 

Page.       Line. 


CANCELING  OF  UNITED  STATES  NOTES. 

5      6  to  14  95  per  cent  of  moneys  paid  into  the  United  States  Treas- 
ury "  for  greenbacks "  to  be  used  to  redeem  and  cancel 
a  like  amount  of  old  issue  of  United  States  notes  to  a 
certain  amount. 
5     19  to  24  After  a  certain  amount  of  United  States  notes  have  been 
C      1  changed  into  greenbacks  [say  $200,000,000],  the  United 

States  Treasurer  to  set  aside  certain  gold  in  the  Treasury 
equal  in  amount  to  the  old  issue  of  United  States  notes 
then  outstanding  as  a  "special  fund"  to  redeem  and  can- 
cel such  notes— [viz,  $140,000,000]. 


276  HILL-FOWLER    BILL,  H.  R.  10289. 

Page.       Line. 

SECRETARY  OF  THE  TREASURY. 

3  13  to  14  Subsidiary   and  minor  coins   (transferred  to   Issue   and 

Redemption  Department)  as  "'SHALL  consider  neces- 
sary," etc.     (See  15  and  14.) 

4  11  to  18  SHALL  maintain  the  (25  per  cent  and  5  per  cent)  gold 

reserve  for  United  States  notes  and  Treasury  notes  and 
silver  dollars  in  the  Issue  and  Redemption  Department 
"at  such  sum  as  shall  secure  the  CERTAIN  AND 
IMMEDIATE  REDEMPTION  OF  ALL  NOTES  and 
all  silver  dollars,"  etc. 
May  transfer  to  Issue  and  Redemption  Department  ANY 
funds  in  the  Treasury,  not  otherwise  appropriated,  in 
excess  of  $50,000,000. 
4  18,  19  SHALL  reserve  a  $50,000,000  [PANIC  FUND]  in 
Treasury. 

4  20  to  25  May  (shall)  "ISSUE  AND  SELL  FOR  GOLD  coin  and 

5  1,       2       "REDEEMABLE   IN  GOLD   COIN"  3  PER  CENT 

ONE-YEAR— FIVE  YEARS  certificates  to  maintain 
the  reserve  in  Issue  and  Redemption  Department. 

5  3  to  7  Authorized  to  exchange  gold  coin  with  Issue  and  Redemp- 
tion Department  for  United  States  notes  or  Treasury 
notes. 

5  7  to  13  Authorized  to  exchange  with  Issue  and  Redemption 
Department  one  denomination  of  notes  for  other  denom- 
inations, and  one  kind  of  notes  for  other  kinds. 

7  5  to  25  *May  transfer   to    Issue   and   Redemption   Department, 

8  lto    7      from  any  unappropriated  funds  in  "THE  GENERAL 

TREASURY,"  UNITED  STATES  OR  TREASURY 
NOTES,  WHICH,  ON  SUCH  TRANSFER,  COULD 
THEN  BE  LAWFULLY  CANCELED  UNDER  THE 
ACT,  IF  THEY  HAD  BEEN  REDEEMED  ON 
PRESENTATION,  and  THEY  SHALL  BE  CAN 
CELED.  (Annul  all  restrictions  other  than  reserve 
notes  issued.) 
16  15  to  23  To  use  funds  available  as  "surplus  revenue"  to  transfer  to 
Issue  and  Redemption  Department  (to  cancel  United 
States  notes,  Treasury  notes,  or  "reserve  notes"). 


(Jouii)trollerB  are  made  Bimply  clerks. 


,  WALKEIt    BILL,  H.  R.  10333.  277 

Page.       Line. 

SECRETARY  OF  THE  TREASURY. 

3     16  to  19  May  issue  such  United  States  legal-tender  notes  as  are 
prescribed  in  the  bill. 

8  5  to  11  May  approve  of  action  of  Comptroller  in  allowing  banks 

to  reduce  their  holdings  of  "greenbacks." 

9  12to20  May  approve  deposits  of  "current  redemption  funds"  in 

certain  places,  in  the  devolving  the  duties  of  "current 
redemption"  upon  reserve  banks  or  other  suitable  agents. 

12  4  to  8  In  case  of  doubt  as  to  what  persons  can  act  on  "Board  of 
Advisers  to  the  ( Jomptroller,"  the  Secretary  of  I  he  Treas- 
ury to  decide. 

12  9  to  14  In  case  of  an  appeal  from  the  decision  of  the  Comptroller 
to  the  Board  of  Advisers,  and  the  decision  of  the  hoard 
is  not  unanimous,  in  such  case  the  decision  of  the  Sec- 
retary of  the  Treasury  to  be  binding  and  final. 

14  23,     21  May  designate  (dealing  houses  as  fiscal  agents  or  deposi- 

tories of  public  moneys. 

15  7  to  14  May  direct  the  Treasurer  or  any  assistant  treasurer  of  the 

United  States  to  accept  from  banks  for  "safe  keeping'' 
any  kind  of  money  or  bonds. 

16  21  to  24  To  approve  action  of  Comptroller  in  issuing  emergency 

17  1  to  16      greenbacks  to  clearing  houses  or  banks 

Also,  approve  of  the  bonds  deposited  as  security  for  such 
notes. 

18  16  to 22  To  publish  in  the  "STATEMENT  OF  THE  CONDITION 

OF  THE  UNITED  STATES  TREASURY.  AND  ITS 
RECEIPTS  AND  EXPENDITURES"  a  list  of  securi- 
ties accepted  to  secure  emergency  greenbacks  or  deposit 
of  public  moneys. 

18  23  to  25  May  issue  and  sell,  "to  carry  into  effect  the  provisions  of 
the  act  of  January  14,  1875,  entitled  'An  Act  to  provide 
for  the  resumption  of  specie  payments,'  and  of  this  act 
FOB  THE  PERIOD  OF  FOUR  YEARS  BONDS 
DESCRIBED  in  the  Act  of  July  14,  1870,  entitled  -An 
Act  to  authorize  the  funding  of  the  national  debt,'"  1-3 
year  bonds,  3-7  year  bonds,  and  bonds  due  on  a  day 
certain  to  run  not  exceeding  three  years. 

21  3  to  12  To  decide  on  the  amount  of  the  tax  associations  shall  pay 
on  the  average  circulation  of  their  "currency,"  but  in  no 
case  over  one-fifth  of  1  per  cent  per  annum. 

21  12  to  17  One  fifth  of  1  per  cent  when  18,000,000  are  accumulated 

22  lto  3      from  such  tax,  and  not  over  1  per  cent  per  annum  in  any 

case. 


278  HILL-FOWLER    BILL,   H.   R.  10289, 

Page.       Line. 


TREASURER  OF  THE  UNITED  STATES. 

2  12  to  18  First  Comptroller  to  be  (practically)  an  assistant  treasurer. 
9    20  to  24  Deposit  with  the   Treasurer    United    States    notes  and 

10  1  to  4  receive  from  Comptroller  "reserve  ^aotes."  [Why  not 
deposit  with  the  Comptrollers?] 

10      8,      9  Deposit  with  Treasurer  United  States  bonds  and  receive 

10  14  to  17  from  Comptroller  "bank  notes"  of  Issue  and  Redemption 
Department. 

22  12  to 23  To  currently  redeem  "circulating  notes"  in  gold  coin  at 
subtreasuries  [conflicts  with  page  3,  lines  17  to  19,  or 
there  must  be  an  Issue  and  Redemption  Department  in 
every  subtreasury.] 

24  14  to  20  Receive  annual  taxes  of  one-fourth  of  1  per  cent  on  fran- 
chise. 

24  24,    25  Hold  taxes  on  franchise  as  a  separate  fund  to  pay  expenses 

25  1  to   3      of  Comptroller. 


WALKER    BILL,  H.  K.  '0333.  270 

Pago.        Lino. 

TREASURER  <»F  Tllli  UNITED  STATES. 

5  G  to  14  Shall  destroy  an  amount  of  existing  United  States  NOTES 
eqnal  to  95  per  cent  of  amonnt  paid  in  to  take  oat 

greenbacks. 
5    14  to  18  Shall  set  aside  5  per  cent  of  such  amount  as  a  common 
redemption  fund  for  "greenbacks"  and  "currency." 

5  19to24  To  set  aside  "CERTAIN  GOLD"  in  Treasury  [in  a  certain 

6  1  case,  viz,  when  $200,000,000  old  United  States  notes  have 

been  canceled  and  new  greenbacks  issued  to  banks 
equal  in  amount  to  outstanding  United  States  notes]  as 
a  "SPECIAL  DEPOSIT"  to  redeem  and  cancel  the 
balance  of  United  States  notes  ($1  t6.000,000). 
6  9  to  15  To  hold  all  moneys  paid  in  for  greenbacks  after  the  "tran- 
sition period"  from  the  present  law  to  the  new  law,  as  a 
SEPARATE  FUND. 

6  1G,     17  To  be  used  to  equitably  adjust  the  holdings  of  the  green- 

7  1  to    6       backs  among  all  commercial  banking  associations. 

7  7  to  11  SHALL  first  reduce  the  holding  of  those  associations 
holding  the  largest  amount  of  greenbacks  in  proportion 
to  their  capital. 

7  11  to  15  May  require  banks  to  increase  their  greenbacks  to  legal 
requirements. 

7  16  to  21  SHALL  reduce  the  amount  associations  are  required  to 
take  below  12i  per  cent  when  necessary  to  keep  the 
total  amount  of  greenbacks  to  a  fixed  amount  [viz, 
$200,000,000]. 

7  22  to  25  The  balance  of  the  "special  gold    fund"  remaining  two 

years  after  being  set  aside  shall  be  free  money  in  the 
Treasury. 

8  5  to  11  In  case  of  expiration  of  charter  or  insolvency  shall  redeem 

greenbacks  by  order  of  the  Secretary  of  the  Treasury. 

8  18  to  25  To  keep  AT  ALL  TIMES  "IN  LAWFUL  MONEY  »  the  5 

per  cent  "greenback"  and  5  per  cent  "currency"1  cur- 
rent redemption  fund. 

9  12  to  20  May   keep  "current  redemption    funds"  in    any  reserve 

bank  or  with  any  suitable  agent  approved  of  by  the 
Secretary  of  the  Treasury. 
May  devolve  duties  as  to  the  current  redemption  of  cir- 
culating notes  on  any  reserve  bank  or  any  other  suitable 
agent. 
10  18  to  24  To  issue  no  more  silver,  gold,  or  currency  certificates,  and 
to  cancel  all  now  existing  as  they  are  paid  in  to  the 
Treasury. 

15  7  to  14  Treasurer  or  Assistant  Treasurers   to  receive  for  "safe- 

keeping" any  bonds  or  moneys  from  any  bank  or  clear- 
ing house  upon  the  approval  of  the  Secretary  of  the 
Treasury. 

16  21  to  24  To  issue  emergency  greenbacks  upon   bond   security  by 

17  1  to  21       direction  of  the  Secretary  of  the  Treasury. 

18  lto    7 

19  15  to  L'O  To  receive  taxes. 
21      3  to  12 

24  15  to  17 

25  1  to   6  To  keep  separate  accounts  of  moneys  received  and  paid 

out  under  each  section  of  the  act. 


280  HILL-FOWLER    BILL,  H.  R.  10289. 

Page.       Line. 


GENERAL  PROVISIONS. 

24  14  to  20  Franchise  tax  of  one  fourth  of  1  per  cent  per  annum. 

25  21  to  24  In  places  of  50,000  inhabitants  or  over,  banks  shall  not  be 

26  1  to  11      organized  with  less  than  $250,000  capital. 

In  places  of  over  0,000  and  under  50,000  people,  not  less 

than  $100,000  capital. 
In  places  of  over  3,000  and  under  6,000  people,  not  less 

than  $50,000  capital. 
In  places  of  less  than  3,000  people,  not  less  than  $25,000 

capital. 

26  12  to  15  Banks  may  establish  branches,  etc. 

27  9  to  13  Examiners  to  have  fixed  salaries. 

27  14  to  25  Concerning  examiners. 

28  lto   3 

29  4  to  11  Comptroller  shall  dissolve  all  national  banking  associa- 

tions that  fail  to  comply  within  one  year  icith  any 
single  provision  of  this  act. 
31     16  to  18  Eepealiug  sections. 


WALKER    BILL,  H.  E.  10333.  281 


Pniie.       Line. 


GENERAL  Provisions. 


2    11  to  14  $25,000  banks  in  places  of  less  than  4,000  inhabitants. 
2     15  to  20  Capital  means  "  PAID  IN  CAPITAL,  SUM 'LI'S,  AND 

UNDIVIDED  PROFITS." 

9    21  to 24  After  transition  is  completed  banks  SMALL  KEEP  their 

10       1  to    3       "cash  reserve,"  as  nearly  as  may  he.  in  equal   parts  of 

gold  coin,  silver  coin,  and  "greenbacks  of  other  hanks.'' 

19    15  to  20  Any  average  deficiency  in  the   average    total  reserve  a 

bank  is  required  to  keep,  for  any  month,  is  taxed  at  the 

rate  of  0  per  cent  per  annum. 

22  4  to  25  Tax  imposed  on  the  deposits  of  all  "commercial  banks'1 

23  1  to  11       that   fail   to  organize  under  the   act,  or  fail   to  assume 

their  share  of  greenbacks,  of  one-tenth  of  1  per  cent  per 
annum  (that  they  may  be  induced  to  assume  their  fair 
share  of  the  obligation  of  maintaining  parity). 

23  12  to  20  All  commercial  banking  associations  other  than  national 
21      1,       2       banks,  assuming   greenbacks,  are  to  make   reports  to 

the  Comptroller  and  be  examined  by  national  bank 
examiners. 

24  3  to  14  Associations   may  require  from   depositors  thirty  days' 

notice  of  intention  to  withdraw  "deposits"  upon  whicb 
interest  is  paid  for  more  than  seven  days,  but  this  does 
not  apply  to  "that  part  of  the  reserves  of  banks  which 
they  are  allowed  to  deposit  in  other  banks." 
24  15  to  17  Section  13  goes  into  effect  the  first  day  of  the  calendar 
quarter  next  succeeding  the  four  months  next  succeed- 
ing the  passage  of  the  act. 

24  18  to  24  All  taxes  imposed  are  due  and  payable  on  April  1  and 

October  1. 

25  1  to    6  All  moneys  collected  under  the  act  to  be  paid  into  the 

Treasury  as  a  "miscellaneous  receipt."  Treasurer  to 
keep  separate  account  of  all  moneys  received  and  all 
moneys  paid  out  under  each  section  of  this  act. 

27  22  to  24  Bank  examiners  are  employees  of  the  Department  of  the 

28  1,       2      Comptroller. 


282  EXPENSES,  ETC.,  OF    BANKS. 


EXPEXSES,  ETC.,  OF  BAXKS  IX  CEXTRAL  RESERVE  CITIES 
COMPARED  WITH  BAXKS  IX  TEX  SMALL  TOWXS  AS  TO 
ITEMS  OF  BAXK  FUXDS  AXD  AS  TO  PEROEXTAGE  OF 
EXPEXDITURES  TO  VARIOUS  FUXDS,  ETC. 

CENTRAL  RESERVE   CITIES. 

Paid-in  capital $76,  700,  000.  00 

Surplus  and  other  profits 73,096,619.89 

Actual  capital 149,  796,  619.  89 

Deposits 645,  633,  468.  73 

Circulation 18,652,022.50 

Total 814,082,111.12 

Annual  expenses  and  taxes 12,  640,  059. 13 

Minimum  United  States  bonds  required 3^  650,'  000.  00 

Per  cent. 

Per  cent  of  expenses  to  paid-in  capital 16.  48 

Per  cent  of  expenses  to  actual  capital 8.  44 

Per  cent  of  expenses  to  bank  funds 1.  55 

Percentage  of  bonds  to  paid-in  capital 4.  76 

Percentage  of  bonds  to  actual  capital 2.  44 

Percentage  of  bonds  to  bank  fuuds 0.  45 

TEN   SMALL   TOWNS. 

Paid-in  capital $930,000.00 

Surplus  and  other  profits 543,  000.00 

Actual  capital 1,  473,  000.  00 

Deposits 1,914,829.78 

Circulation 460,580.00 

Total 3,848,409.00 

Annual  expenses  and  taxes 65,  424.  00 

Minimum  United  States  bonds  required 232^500.00 

Per  cent. 

Per  cent  of  expenses  to  paid-in  capital 7.  04 

Per  cent  of  expenses  to  actual  capital 4.44 

Per  cent  of  expenses  to  bank  funds 1.  61 

Percentage  of  bouds  to  paid-in  capital 25.  0 

Percentage  of  bonds  to  actual  capital 15.  78 

Percentage  ef  bonds  to  bank  funds 6.04 


expenses,  etc.,  of  hanks.  283 

Treasury  Department, 
Office  of  the  Comptroller  of  the  Oi  rrency, 

Washington,  />.  C,  August  22,1898. 

Hon.  J.  II.  Walker, 

Chairman  Committee  on  Banking  ami  Currency: 

Statement  showing  the  amount  of  expenses  and  taxes  paid  by  the  national  hanks  located  in 
the  central  reservi  cities  of  New  York.  Chicago,  and  St.  Louis,  as  shown  by  the  iemi- 
annual  reports  of  earnings  and  dividends  as  made  to  the  Comptroller  of  the  Currency  for 
the  year  ending  September  i.  1897. 

SEPTEMBER  1,  1896,  TO  MAIJCH  1,   1    >7 

Exp<  uses  and  taxi 

New  York  City $4,885,142.08 

Chicago 1,185,791 

St.  Louis 477,888.58 

$6, 548, 822. 54 

MABCH  1.  1897.  TO  SEPTEMBEB  1,  1897. 

Expenses  and  taxes. 

New  York  City $4,515,200.63 

Chicago 1,183,892.26 

St.  Louis 392,047.70 

$6,  091,  236. 59 

Total  for  year  ending  September  1,1897 12,040,059.13 

Treasury  Department, 
Office  of  the  Comptroller  of  thf:  Currency, 

Washington,  I).  C,  July  29,  1S93. 
Hon.  J.  H.  Walker, 

Netc  Hampton,  N.  II. 
Sir:  In  compliance  with  your  request  of  July  20,  I  inclose  herewith 
a  statement  showing  the  expenses  and  taxes,  during  six  months,  often 
banks,  "located  in  the  smallest  places  in  which  there  is  a  single  bank, 
having  capital,  surplus,  and  undivided  pronts  of,  approximately, 
$145,000  to  $155,000." 

Very  respectfully, 

Charles  G.  Dawes,  Comptrolh  r. 

Actual  average  capital £1  !  '•  •_'"';  "" 

Average  annual  expenses 6,542.40 


State. 

Bank. 

Popula- 
tion. 

Capital. 

l 
Surplus 
and 

profits. 

and  ' 

last  six 
months. 

[ndi  vidua] 
depot 
repoi  t  ••( 
L896. 

Indiana 

Massachusetts  .. 
New  Jersey 

Do 

Mil  ford  First  National  Bank  .. 
Rising  Sun.  National  Bank  of.. 

Natirk.  National  Bank  of 

Medford,  Burlington  County  .. 
NewPaltz,  Hugenol  National 

Bank. 
Pine  Plains,  Stissing  National 

Bank. 
Warwick  Fir--t  National  Bank. 
Ambler  First  National  Bank  .. 
Burgettstoii  n.    Burgettetow  n 

National  Bank. 
Kennett    Square,    National 

Bank  of. 

1,300 
1,800 
1,000 
1,000 
1,200 

Tun 

1,700 

1.  100 
1,000 

1,500 

$60, 000 
Kin.OOO 

LO 1 

100 
100 

90,000 

100,  000 

1 00 

100,000 

$96.  "mo 
4: 

12,  ooo 
M 

41 

52,000 

50,( 

55  

45,000 

$■_'.  866 

4.4H1 

1,776 
4,016 

2,  698 

;:..  :..r. 

323.  616.  47 
L03.701.  19 
IC     510.59 

])o 

176  276.  33 

Pennsylvania 

Do 

-    • 

Do 

930.  IM.K) 

543,  000 

32,712    1,914- 

THE  CLEARING  HOUSES  IN  THE  COUNTRY. 

[Statement  prepared  by  the  chairman  of  the  committee.] 

The  clearing  house  has  become  indispensable  to  the  conduct  of  the 
business  of  banking.  Each  bank,  large  or  small,  country  or  city,  is 
indissolubly  connected  with  other  banks,  and  through  them,  if  not 
directly,  with  the  clearing  house.  The  efficiency  of  a  bank  is  very 
largely  dependent  upon  the  clearing  house.  Only  through  clearing 
houses  can  the  equality  and  independence  of  banks  be  preserved  or 
their  highest  efficiency  attained. 

It  is  as  necessary  to  banks  to  have  incorporated  clearing  houses  as  it 
is  to  business  firms  and  corporations  to  have  incorporated  banks.  The 
incorporation  of  neither  is  absolutely  necessary.  In  fact,  a  large  part 
of  banking  is  done  by  private  firms,  but  only  by  reason  of  the  exist- 
ence of  banking  "corporations"  are  they  successful.  All  the  banking 
of  the  world,  or  of  the  country,  could  not  be  done  outside  of  the  obli- 
gations and  responsibility  imposed  in  fixed  legal  rules  and  the  control 
of  banks  by  positive  corporation  law.  Whatever  may  be  the  appear- 
ances to  the  contrary,  a  bank  can  not  exist  by  itself  alone  in  this  stage 
of  commercial  development,  like  a  cotton  or  woolen  factory,  which  is 
all  the  more  reason  for  uniform  regulation  and  control  of  banks  by  law. 

Of  seventy-six  clearing  houses  given  on  page  551  of  volume  1,  Report 
of  the  Comptroller  of  the  Currency  for  1897,  I  have  examined  the  con- 
stitution and  by-laws  of  fifty-five  at  hand,  and  herein  indicate  the  main 
provisions  of  all  taken  together.  I  see  no  reason  why  each  one  of  these 
clearing  houses  could  not  continue,  if  incorporated  under  the  Walker 
bill  (H.  R.  10333),  the  doing  of  its  business  in  such  manner  as  it  has 
chosen  for  itself  and  without  any  substantial  alteration  of  its  constitu- 
tion or  by-laws.  Of  course,  the  advantages  of  a  broader  field  and  the 
security  of  more  definite  rules,  by  many  of  them,  are  so  obvious,  it  is 
believed  they  would  soon  enter  upon  a  broader  and  at  the  same  time 
equally  conservative  action.  There  are  no  substantial  provisions  in  the 
regulations  of  any  of  the  fifty-five  examined  not  given  under  the  name 
of  some  one  of  them.  None  contains  any  substantial  provisions  not 
enumerated  under  the  name  of  some  one  of  those  mentioned.  Some 
forbid  what  others  require,  according.to  the  volume  or  kind  of  business 
they  do. 

ST.  LOUIS,  MISSOURI. 

Article  1,  section  1.  "The  object  of  the  association  shall  be  the 
effecting,  at  one  place,  of  the  daily  exchanges  between  the  several 
associated  banks  and  bankers,  *  *  *  anil  the  fostering  and  pro- 
moting of  sound  conservative  banking;  *  *  *  the  regulating  of 
exchanges,  the  fixing  of  minimum  rates  to  be  charged  on  outside  drafts 
and  collections,"  etc. 

Section  3.  The  committee  of  management  shall  have  power  to  suspend 
any  bank  by  unanimous  vote    *     *     *    but  shall  forthwith  call  a  meet- 
ing of  the  association  to  consider  such  suspension,  etc. 
284 


STRENGTHENING    THE    PUBLIC    CREDIT,   ETC.  285 

Section  8.  The  action  of  the  clearing  house  is  only  thai  of  an  agent, 
and  iu  no  case  shall  this  association  be  held  responsible  for  any  lo 
that  may  occur  by  reason  of  its  action. 

Section  11.  Whenever  any  member  of  the  association  shall  send  and 
receive  through,  the  clearing  house  the  exchanges  of  any  bank  in  tin- 
city  or  vicinity  who  are  not  members,  such  sending  and  receiving  shall 
ipso  facto  and  without  further  notice  constitute  said  member  the  agent 
for  said  bank  at  the  clearing  house,  etc. 

Section  L3.  A  standing  committee  of  five  bank  officers  or  banker* 
shall  be  elected,  to  be  called  a  committee  of  arbitration,  whose  duty  it 
shall  be  to  hear  and  determine  all  disputes  that  may  be  submitted  to  it 
by  both  parties  thereto.  *  *  *  A  majority  decision  shall  be  valid. 
Section  15.  No  member  shall  be  added  to  this  association  haviup  a 
paid-up  capital  of  less  than  $500,000. 

Section  17.  Shall  pay  an  entrance  fee  of  $1,000  and  in  addition  its 
several  assessments  for  expenses. 

Article  2,  section  1.  Each  member  of  the  association  shall  furnish 
the  manager  a  sworn  statement  of  its  condition  as  often  as  live  times 
each  year  *  *  *  and  at  such  other  times  and  of  such  date  as  the 
clearing-house  committee  may  require.    *    *    * 

The  following  shall  be  regarded  as  cash  reserve,  viz: 

Balances  due  from  other  banks  payable  on  sight  draft, 
Silver, 
Gold, 

Legal  tenders, 
National-bank  notes, 
Gold  and  silver  certificates, 
Amount  due  United  States  Treasurer, 
Clearing-house  loan  certificates. 
Section  2.  Upon  a  vote  of  four-fifths  of  the  members  of  this  associa- 
tion a  committee  of  five  shall  be  elected  by  the  association,  who  may 
receive  from  banks,  members  of  the  association,  bills  receivable  and 
other  securities  to  be  approved  by  it,  and  shall  be  authorized  to  issue 
therefor  to  such  depositing  bank  loan  certificates  to  an  amount  not  to 
exceed  75  per  cent  of  the  face  value  of  the  securities  or  bills  receivable 
so  deposited,  etc. 

ROCHESTER,  NEW    YORK. 

Section  24.  No  member  of  this  association  shall  clear  for  any  other 
institution  or  banking  linn  not  a  member. 


't> 


BUFFALO,  NEW   YORK. 

Section  7.  Any  bank,  after  one  day's  notice  of  a  hearing  before  the 
association,  may  be  expelled  from  the  association  and  debarred  from 
all  the  privileges  of  the  clearing  house  by  a  four  fifths  vote  of  the 
whole  number  of  associated  banks. 

Section  8.  The  clearing-house  committee,  acting  in  concurrence  with 
the  arbitration  committee,  may  cause  an  examination  to  be  made  of  any 
bank  member  of  the  association  *  *  *  and  shall  have  power  to 
suspend  any  bank,  etc. 

Section  19.  Balances  shall  be  paid  in — 

United  States  Treasury  certificates. 

United  States  legal  tender  notes. 

National  bank  notes. 

Gold  coin. 

Gold  certificates. 

Silver  certificates. 


286  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

Section  25.  This  association  shall  receive  *  *  *  on  special  trust 
such  United  States  gold  coiu  as  any  member  *  *  *  may  choose  to 
seud  to  it  for  safe-keeping,  for  clearing-house  purposes:  *  *  *  cer 
tificates  in  exchange  for  such  coin  shall  be  issued  to  the  depositing  bank 
in  denominations  of  $5,000,  etc.,  *  *  *  negotiable  only  among 
banks,  members  of  the  association,  etc. 

Section  20.  Each  bank  member  of  the  clearing-house  association 
shall  furnish  the  manager  a  weekly  statement  of  its  condition,  signed 
by  its  officers,  on  uniform  blanks  provided  by  the  association,  *  *  * 
for  the  private  use  of  each  member,  showing  the  average  amount  of — 

1.  Loans  and  discounts. 

2.  Deposits. 

3.  Due  from  banks. 

4.  Checks  for  next  day's  exchanges. 

5.  Clearing-house  gold  certificates. 

6.  All  other  currency. 

7.  Eediscounts. 

BALTIMORE,  MARYLAND. 

Section  5.  The  executive  committee  are  authorized  to  take  into  con- 
sideration and  investigate  any  and  all  matters  affecting  and  pertaining 
to  the  banking  interests  of  the  city  which  may  be  referred  to  them  in 
writing  by  this  association  or  any  member  thereof;  to  report  to  the 
association  such  recommendation  in  the  case  as  they  may  deem  wise 
and  proper.  Whenever  they  consider  it  for  the  interests  of  the  associa- 
tion they  are  empowered  to  require  from  any  member  securities  of  such 
an  amount  and  character  as  they  deem  sufficient  for  the  protection  of 
the  balances  resulting  from  exchanges  at  the  clearing  house.  State 
banks,  members  of  the  clearing-house  association,  shall  be  examined  in 
the  same  manner  as  national  banks  and  by  the  national-bank  examiner, 
etc. 

Section  6.  Be  a  depository  of  such  moneys  as  any  associated  bank 
may  desire,  shall  remain  a  special  deposit  for  safe-keeping,  and  issue 
therefor  certificates  in  concurrent  amounts,  etc. 

Section  7.  The  compensation  to  the  depositing  bank  shall  be  paid  by 
the  several  banks  in  proportion  to  their  respective  capitals,  at  the  rate 
of  30  cents  per  annum  on  each  $1,000  of  capital  stock. 

SAN  FRANCISCO,  CALIFORNIA. 

Article  14.  The  debtor  banks  shall  pay  to  the  manager  at  the  clearing 
house  in  ' 

Gold  coin, 

Clearing-house  certificates  it  has  issued,  or 
Gold  certificates. 

CHICAGO,  ILLINOIS. 

Section  20.  All  moneys  paid  in  shall  be  in 
Gold  coin, 

Legal-tender  notes, 

Treasury  certificates, 

National  bank  notes, 

its  own  clearing-house  certificates. 


STRENGTHENING    THE    PUBLIC   CREDIT,  ETC.  287 

WASHINGTON,  DISTRICT   OF   COLUMBIA. 

Article  16.  The  clearing-house  committee  shall  have  full  power  and 
authority  at  any  tunc  to  direct  an  examination,  by  any  three  of  its 
members,  into  the  affairs  and  condition  of  any  member  *  *  *  for 
the  use  and  information  of  the  other  memberB  of  t  he  association,  but  to 
be  otherwise  confidential. 

LEXINGTON,  KENTUCKY. 

Article  11.  No  money  shall  pass  through  the  clearing  house  in 
making  the  exchanges.  [Persons  unfamiliar  with  banking  will  find 
such  "clearings"  are  fully  described  in  a  monograph  on  Money,  Trade. 
and  Banking,  by  J.  H.  Walker:  Houghton,  Mifflin  &  Co.,  Boston.] 

SALT  LAKE   CITY,  UTAH. 

Article  3.  The  members  are: 
Wells,  Fargo  &  Co., 
The  Deseret  National  Bank, 
W.  8.  McCormick  &  Co., 
T.  K.  Jones  &  Co., 
The  Union  National  Bank, 
The  Commercial  National  Bank, 
Utah  Commercial  and  Savings  Bank, 
State  Bank  of  Utah, 
National  Bank  of  the  Republic, 
Bank  of  Commerce, 
Utah  National  Bank. 

FORT  WORTII,  TEXAS. 

Section  8.  Debtor  banks  shall  pay  to  the  manager  of  the  clearing 
house  the  balances  due  from  them  either  in 
Gold  coin. 

United  States  notes,  or 
National-bank  bills. 

KNOXVILLE,  TENNESSEE. 

Section  17.  Applications  for  membership  must  state,  if  a  bank,  its 
capital;  if  a  private  banking  house,  names  of  individual  partners,  name 
of  person  authorized  to  sign,  etc. 

NORFOLK,  VIRGINIA. 

Section  12.  The  balances  due  the  clearing  house  shall  be  paid  in 
Currency  or 
Gold  coin, 
and  shall  be  put  up  in  packages  of  $500,  etc. 

Section  L3.  The  executive  committee  shall  require  from  each  member 
of  the  association  securities  of  such  amount  and  character  as  said 
committee  may  deem  sufficient  for  the  protection  of  balances  resulting, 
etc..  or  other  satisfactory  guaranties. 

Section  15.  Be  a  depository  to  receive  in  special  trust  such  currency 
as  any  of  the  members  may  choose  to  -end  to  it  tor  safe  keepii 


288  STRENGTHENING    THE    PUBLIC    CREDIT,  ETC. 

DAYTON,  OHIO. 

Section  14.  The  expenses  of  the  clearing  house  shall  be  paid  equally 
by  each  member  of  the  association. 

PORTLAND,  MAINE. 

Article  13.  The  debtor  banks  shall  pay  to  the  manager  of  the  clearing 
house  in 

Gold  coin,  or  in  its  own 
Clearing-house  certificates, 
flip  1  vi  1  *i ti c* f * s  duo   etc 

Article  15.  Gold  coin  of  the  quantities  of  §20,000,  $10,000,  and  $5,000, 
for  the  payment  of  balances,  shall  be  brought  in  sealed  bags,  etc. 
Article  17.  Cleariug-house  certificates  payable  in 
Gold  coin. 

WILMINGTON,  DELAWARE. 

Section  9.  The  character  of  the  funds  to  be  used  in  payment  of  bal- 
ances to  or  from  the  clearing  house  will  be  Philadelphia  or  New  York 
exchange,  excepting  for  amounts  less  than  $1,000,  which  may  be  in 
currency,  at  the  option  of  the  payers. 

SYRACUSE,  NEW  YORK. 

Article  3,  section  2.  Private  bankers  *  *  *  may  be  admitted  to 
membership  by  a  two-thirds  vote. 

LOUISVILLE,   KENTUCKY. 

Article  10.  Each  member  of  the  association  shall  furnish  the  man- 
ager, on  the  first  Monday  of  each  month,  a  statement  in  tabular  form 
of  the  averages  for  the  month  previous  of  its 

Capital, 

Surplus, 

Loans, 

Cash  on  hand, 

Eastern  exchange, 

Due  from  banks  other  than  Eastern, 

Bills  payable, 

Rediscounts, 

Deposits, 
which  shall  be  open  to  the  principal  officers  of  any  member. 

KANSAS   CITY. 

Section  7.  May  examine  any  bank  belonging  to  the  clearing  house 
and  require  any  and  all  members  to  deposit  *  *  *  securities  of 
such  an  amount  and  character  as  shall  be  satisfactory  to  the  clearing 
house  for  the  purpose  of  securing  any  debt  balance  that  may  occur  iu 
the  adjustment  of  clearances  against  the  member  making  such  deposit, 
etc.  *  *  *  Shall  receive  bills  receivable  and  other  securities 
*  *  *  and  issue  therefor  *  *  *  loan  certificates  to  an  amount 
not  exceeding  85  per  cent,  etc. 


STRENGTHENING    THE    PUHLIC    CREDIT,  ETl  289 

Section  15.  For  cause  deemed  sufficient  by  the  associated  banks,  any 
bank  maybe  expelled  from  the  association  and  debarred  from  all  the 
privileges  of  the  clearing  house,  bj  a  majority  vote,  ;it  any  meeting  of 
the  association. 

By  laws,  section  11.  Each  member  of  the  association  shall  furnish  ae 

often  as  five  times  ;i  year  a  sworn  statement  of  its  condition, 

;iml  at  such  other  times  and  of  such  dates  as  the  clearing  house  may 
require,    *    *    *    oi»eii  to  t  lie  inspection  of  members  only. 

M'.W    YORK,    M.W     5  ORK. 

Section  2.  Acts  as  an  agenl  only. 

Sections.  May  examine  any  bank  member  of  the  association.     May 
require  security  of  such  amount  and  character,  etc. 
Section  it;.  Every  bank  member  shall  furnish  a  weekly  statement  of 

its  condition,  etc.,  for  publication,  showing  the  average  amount  of — 

1.  Loans  and  discounts. 

2.  Specie. 

3.  Legal-tender  notes. 

4.  Circulation. 

5.  Deposits. 

Section  17.  May  receive  by  an  appointed  bant  in  special  trust 
Coin  or 

United  States  legal  tender  notes 
from   any   association  for  safe  keeping,  or  may   appoint   the  assistant 
treasurer  of  the  United  States  at  New  York  a  depositary,  etc. ;  certifi 
cates  to  be  issued  in  exchange  for  such  deposit,  negotiable   among 
members  only. 

Section  21.  Standing  committee  may  suspend  any  bank,  but  must 
immediately  call  a  meeting  of  the  association  to  act  on  the  case,  etc. 

Page  11,  resolution  of  April  8,  1  STl'.  That  the  (dealing  house  com 
mittee  be.  and  is  hereby,  directed,  whenever  it  appears,  in  its  judgment, 
that  legal-tender  notes  have  been  withdrawn  from  use  through  the 
agency  of  any  bank,  member  of  the  association,  to  make  an  immediate 
examination  of  the  bank  in  question,  and  should  there  appear  to  be 
complicity  on  the  part  of  the  bank  or  its  officers,  to  suspend  said  bank 
from  the  clearing  house  until  action  of  the  association  shall  betaken 
thereon. 

Page  13.  Adopted  February  14,  1872. 

1.  The  ISTew  York  Clearing  House  Association  or  any  members  thereof 
may  unite  for  the  purpose  of  clearing  checks  payable  in  gold. 

6.  The  adoption  of  this  system  shall  not  prohibit  any  bank  from  pre- 
senting gold  checks  for  payment  to  the  banks  on  which  they  arc 
drawn,  etc. 

b  &  c 10 


UNIVERSITY  OF  CALIFORNIA  AT  LOS  ANGELES 

THE  UNIVERSITY  LIBRARY 

This  book  is  DUE  on  the  last  date  stamped  below 


DEC  2    1948 


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Form  L-9-15m-3 ,'34 


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